Softbank Corp. · TSE:9434
Softbank — Q1 FY2020 Earnings Presentation
75 slides from Softbank's earnings presentation, Aug 4, 2020
Slide 1: SoftBank's Digital Shift
SoftBank’s Digital Shift SoftBank Corp. August 4, 2020 0
Slide 2: Digitalization for Consumer Business
Digitalization for Consumer Business Conventional “New Normal” Face-to-face/Gathering type Non-face-to-face/Remote type Stores Promote store visits Face-to-face contact Reservations/hearings Online contact Mass retailers Large scale on-site events Live streaming events 1
Slide 3: Digitalization for Consumer Business
Digitalization for Consumer Business Digitalized customer acquisition events to prevent spread of infection Conventional “New Normal” Large-scale gathering type events Distributed live streaming type events Main store Distributed sites Avoid Small crowded number of situations customers Crowded Risk
Slide 4: Successfully maintaining contact with customers
Digitalization for Consumer Business Number of events (Weekly average) 1,400 Distributed 1,200 live streaming type events Successfully 1,000 maintaining contact 800 with customers 600 while preventing the spread of infection 400 200 0 Jun 2019 Jun 2020 (Note) Duration: weekend average in June 2019,
Slide 5: Digitalization for Enterprise Business
Digitalization for Enterprise Business Conventional “New Normal” Visit/Face-to-face meeting Non-face-to-face/Online Email marketing On-site hearing On-site negotiation Webinar, etc. Online negotiation On-site support Seal on contract Remote configuration Digital seal/signature (Note) Digital signatu
Slide 6: Online business discussions becoming new normal
Digitalization for Enterprise Business Styles of biz discussions Other Online biz discussion 16％ becoming “new normal” June 2020 Customers Sales Online 84% SE 5
Slide 7: DX increased customer contacts to 730k, c. 3x
Digitalization for Enterprise Business Total number of customer contacts 700,000 DX has increased number of 600,000 730k customer contacts to by 500,000 c. 3x 400,000 300,000 260k 200,000 100,000 0 Jun 2019 Jun 2020 (Note) The number of customer contacts is the sum of the number of emails delivered,
Slide 8: Digital Worker 4000 Project
Digital Worker 4000 Project Increasing productivity and shifting to high value-added work Promoting DX in work Shifting to new workstyles AI Customer care Enterprise Consumer RPA BPR Online usage Technology HR/GA/Finance 7
Slide 9: Earnings Results for the Three Months Ended June 30, 2020
Earnings Results for the Three Months Ended June 30, 2020 SoftBank Corp. August 4, 2020
Slide 10: Disclaimer
Disclaimer Important Notice Regarding Forward Looking Statements and Other Information This document is based on the information available to SoftBank Corp. (“we” or “the Company”) as of the time hereof and assumptions which it believes are reasonable. Statements contained herein that are not histor
Slide 11: Consolidated Results
Consolidated Results Q1 Fiscal Year 2020 10
Slide 12: Revenue
Revenue [JPY bn] 12,000 1,164.9 1,172.6 1,101.0 10,000 Even with COVID-19 impact 8,000 Increased 6,000 total revenue 4,000 2,000 0 (Notes) Actuals for FY2018 have been adjusted retrospectively to have FY2018 Q1 FY2019 Q1 FY2020 Q1 consolidated Z Holdings Corporation (formerly Yahoo Japan Corporation
Slide 13: Revenue by Segment
Revenue by Segment [JPY bn] 1,172.6 1,164.9 Yahoo 238.6 273.9 Despite decline of consumer Distribution/ 113.7 handset sales, etc. Other, Adjustment 110.8 Enterprise 154.5 162.5 Increased revenue in Yahoo and 658.1 625.4 Enterprise Consumer FY2019 Q1 FY2020 Q1 12
Slide 14: Operating Income
Operating Income [JPY bn] 279.9 268.9 259.2 2,500 2,000 1,500 Up 4% 1,000 500 0 FY2018 Q1 FY2019 Q1 FY2020 Q1 13
Slide 15: Operating Income by Segment
Operating Income by Segment [JPY bn] 279.9 268.9 Yahoo 36.2 50.6 Distribution 5.3 Enterprise 28.1 5.5 31.3 Yahoo and Enterprise Consumer contributed to 205.7 189.4 profit increase Other, -6.5 3.2 Adjustment 2018年度 FY2019 Q1 2019年度 FY2020 Q1 14
Slide 16: Adjusted Free Cash Flow (excluding Z Holdings)
Adjusted Free Cash Flow (excluding Z Holdings) [JPY bn] 236.3 Impact from IFRS 16 2,000 159.0 136.2 Up 49% 1,500 Impact from IFRS 16 1,000 202.3 128.0 500 0 (Note) Adjusted free cash flow = free cash flow ± total cash flows relating FY2018 Q1 FY2019 Q1 FY2020 Q1 to non-recurring transactions with So
Slide 17: Net Income
Net Income [JPY bn] 161.4 164.8 1,600 99 152.1 One-time factors 1,400 (gains on sales and valuations, etc.) Excluding one-time factors 1,200 of last fiscal year 1,000 800 600 154.9 Flat 400 200 0 FY2018 Q1 FY2019 Q1 FY2020 Q1 (Note) Net Income: net income attributable to owners of SoftBank Corp. 16
Slide 18: Progress Toward Forecasts
Progress Toward Forecasts [JPY] Revenue Full year 4.9 tn forecast16,000 Good progress 14,000 Operating 12,000 income 10,000 920.0 bn towards increased 8,000 revenue & profit Net income 485.0 bn 6,000 Progress 24% 30% 4,000 Q1 2,000 1.2 tn 31% 279.9 bn 152.1 bn 0 17
Slide 19: Business by Segment
Business by Segment 18
Slide 20: Consumer: Revenue
Consumer: Revenue [JPY bn] 658.1 635.3 625.4 Sales of 128.4 600.0 goods 97.4 and others 147.0 Despite decline of handset sales 11.3 18.9 Electricity 500.0 95.0 Service revenues Broadband 87.8 97.2 400.0 300.0 remained flat 200.0 400.5 423.3 412.0 Mobile 100.0 (Notes) 0.0 Service revenues: sum of Mob
Slide 21: Consumer: Operating Income
Consumer: Operating Income [JPY bn] Full year profit 205.7 191.3 expected to increase 2,000 189.4 Declined in Q1 due to one-time factors 1,500 Good business momentum 1,000 kept with continued growth in smartphone and broadband subs 500 YoY change -16.4 Handset Recording of reserve for related handse
Slide 22: Smartphone Cumulative Subscribers
Smartphone Cumulative Subscribers [Mil] 24.50 22.45 2.04 mil 20.72 net adds 20.00 18.89 Up 9% 15.00 10.00 Net adds for all brands 5.00 0.00 FY2017 Q1 FY18 Q1 FY19 Q1 FY20 Q1 (Note) Including enterprise subscribers 21
Slide 23: Broadband Cumulative Subscribers
Broadband Cumulative Subscribers [Mil] 7.99 7.70 7.22 7 6.40 6 SoftBank Hikari Up 9% 5 4 6.60 3 6.05 5.26 2 4.01 1 0 FY2017 Q1 FY18 Q1 FY19 Q1 FY20 Q1 (Note) “SoftBank Air” subscribers are included in “SoftBank Hikari” subscribers 22
Slide 24: Enterprise: Revenue
Enterprise: Revenue [JPY bn] 162.5 154.5 147.8 160.0 Business 140.0 43.4 solution 30.3 37.5 and others120.0 Up 5% 100.0 49.1 47.3 Fixed-line 52.2 80.0 60.0 40.0 65.2 67.8 71.9 Mobile 20.0 0.0 FY2018 Q1 F2019 Q1 FY2020 Q1 23
Slide 25: Enterprise: Operating Income
Enterprise: Operating Income [JPY bn] 31.3 28.1 300 250 23.9 Demand for telework drove growth 200 150 100 Up 11% 50 0 FY2018 Q1 FY2019 Q1 FY2020 Q1 24
Slide 26: Enterprise: Surge in Telework Demand
Enterprise: Surge in Telework Demand Remote access to corporate system Web conference Voice calls *2 Internet access via VPN *1 New connected IDs New connected IDs New connected IDs 2x 48x 3x FY2019 Q4 FY2020 Q1 FY2019 Q4 FY2020 Q1 FY2019 Q4 FY2020 Q1 *1 A service that enables access to corporate sy
Slide 27: Yahoo: Revenue
Yahoo: Revenue [JPY bn] 273.9 250 231.1 238.6 67.5 200 71.9 72.6 Media 150 100 206.4 Up 15% Commerce 159.2 166.0 /Other 50 0 FY2018 Q1 FY2019 Q1 FY2020 Q1 (Note) Revenue for Commerce and Media is restated for FY2019 to reflect the transfer of certain services and subsidiaries from Commerce to Media
Slide 28: Yahoo: Operating Income
Yahoo: Operating Income [JPY bn] 500 50.6 39.3 Growth in Commerce 36.2 400 300 Up 40% 200 <YoY> ZOZO consolidation +7.0 100 EC usage increase +7.0 Cost reduction effect +3.0 0 Ad placement decline -3.0 FY2018 Q1 FY2019 Q1 FY2020 Q1 27
Slide 29: Yahoo: E-Commerce Transaction Value
Yahoo: E-Commerce Transaction Value [JPY bn] 7,073 707.3 7,000 6,000 584.0 536.7 483.6 Up 21% 5,000 4,000 Due to ZOZO consolidation 3,000 2,000 PayPay Mall, etc. 1,000 0 FY2017 Q1 FY18 Q1 FY19 Q1 FY20 Q1 28
Slide 30: PayPay: Cumulative Registered Users
PayPay: Cumulative Registered Users [Mil] 3,000万 30 Registered users exceeded 30 mil 20 2,000万 1,000万 10 As of June 2020 0 0万 Oct 2018 Jun 2020 (Source) Data by PayPay Corporation, collected from October 5, 2018 to June 30, 2020 (Note) Number of registered users: number of accounts registered 29
Slide 31: PayPay: Number of Payments
PayPay: Number of Payments [Mil] 430 4億 400 Number of payments increased by 3億 300 2億 200 9x in one year 1億 100 50 0億 0 FY2019 FY2020 Q1 Q2 Q3 Q4 Q1 (Source) Data by PayPay Corporation (Note) Data is as of August 4, 2020 30
Slide 32: Consolidated Results
Consolidated Results [JPY bn] FY2019 FY2020 YoY YoY % Q1 Q1 Revenue 1,164.9 1,172.6 +7.8 +1% Operating Income 268.9 279.9 +11.1 +4% Net Income 164.8 152.1 -12.7 -8% Adjusted Free Cash Flow 159.0 236.3 +77.3 +49% (Notes) Net Income: net income attributable to owners of SoftBank Corp. Adjusted free ca
Slide 33: Target of JPY 1 Trillion Operating Income
Announced in May 2019 Target of JPY 1 Trillion Operating Income
Slide 34: Road to Achieve JPY 1 Trillion Operating Income in FY2022
Road to Achieve JPY 1 Trillion Operating Income in FY2022
Slide 35: FY2022 Targets
FY2022 Targets [JPY] Revenue 5.5 tn Operating 1 tn Net Income 530 bn Income 5.5 tn 4.9 tn 4.9 tn 4.7 tn 1 tn 912 bn 920 bn 818 bn 530 bn 462 bn 473 bn 485 bn FY18 FY19 FY20 FY22 FY18 FY19 FY20 FY22 FY18 FY19 FY20 FY22
Slide 36: Maximizing our corporate value by driving two pillar strategies
Maximizing our corporate value by driving two pillar strategies 5G FinTech RPA Growth Structural Strategy Reform E-Commerce AI IoT
Slide 37: Growth Strategy Beyond Carrier
Growth Strategy Beyond Carrier New Business Fields Yahoo/LINE Telecom Business
Slide 38: Strategies for JPY 1 tn Operating Income
Strategies for JPY 1 tn Operating Income 1 PayPay as a Platform 2 Smartphone Expansion and Enterprise DX 3 Cost Containment 4 Financing and Shareholder Returns
Slide 39: PayPay
Smartphone Payment PayPay
Slide 40: PayPay Strengths
PayPay Strengths No. of users No. of merchants Recognition App update 30 mil 2.3 mil No. 1 60 times/year locations PayPay pickup service COVID-19 alert function Link to My Number Points
Slide 41: PayPay Platform Strategy
PayPay Platform Strategy Financial Services Unified PayPay brand Revenue model establishment Mobile Boost of smartphone penetration Differentiation through PayPay service E-Commerce Transition to PayPay Mall and PayPay Flea Market Reciprocal customer transfer
Slide 42: To unify existing financial services with PayPay brand
Financial Services To unify existing financial services with PayPay brand Existing services After brand change No. of users 30 mil Recognition No. 1 (Note) The change of company names is planned after the approval at the shareholders' meeting of each company and approval from the relevant government
Slide 43: PayPay as a gateway to connect numerous financial services
Financial Services PayPay as a gateway to connect numerous financial services seamlessly Insurance Splitting Hotel bills Investment/FX Loan Taxi Banking Public Utilities Communi- cation E-Commerce Card Asset management Lending
Slide 44: PayPay brings smartphones to wider span of generations
PayPay brings smartphones to wider span of generations
Slide 45: PayPay differentiates our mobile services from others
Mobile PayPay differentiates our mobile services from others E-Commerce Banking / Insurance E-Commerce Savings Payment Asset management Payment Investment Mobile PayPay Bonus
Slide 46: PayPay captures more customers leading to transaction value expansion
E-Commerce PayPay captures more customers leading to transaction value expansion PayPay E-Commerce Sending customers through point rewards / Recognition improvement Reciprocal customer transfer No. of users 30 mil Sending e-commerce users / Commission fees Recognition No. 1
Slide 47: PayPay at core to pursue business synergies
PayPay Platform Strategy PayPay at core to pursue business synergies Strengths as No. 1 Business Synergies No. of users Financial 30 mil services No. of merchants 2.3 mil locations Recognition Mobile No. 1 App update 60 times/year E-Commerce
Slide 48: Strategies for JPY 1 tn Operating Income
Strategies for JPY 1 tn Operating Income 1 PayPay as a Platform 2 Smartphone Expansion and Enterprise DX 3 Cost Containment 4 Financing and Shareholder Returns
Slide 49: SoftBank Core Business Strategy
Growth Strategy SoftBank Core Business Strategy １ 2 Smartphone Expansion Enterprise Digitalization
Slide 50: Smartphone cumulative subscribers target 30 mil
Smartphone cumulative subscribers [Mil] 30 mil 24.13 Target 22.08 20.13 30 mil smartphone users in FY2023 FY2017 FY18 FY19 FY2023 [Target] (Note) Including enterprise subscribers
Slide 51: Target 30 mil smartphone users
Target 30 mil smartphone users Thoroughly reinforce our existing strategy Collaboration with Multi-brand Strategy Yahoo and PayPay １ Strong acquisition １ Trigger for new subscriptions Competitors Competitors ２ Upgrade promotion ３ Retention effect 2 Retention effect
Slide 52: 5G Deployment
Target 30 mil smartphone users 5G Deployment March 2022 Population coverage 90%+ 50,000 base stations 10,000 base stations Mar 2021 Mar 2022
Slide 53: Smartphone cumulative subscribers and 5G target
Smartphone cumulative subscribers [Mil] 30 mil Target 22.08 24.13 60% 5G 20.13 5G smartphone users smartphones in FY2023 3G/4G smartphones FY2017 FY18 FY19 FY2023 [Target] (Note) Including enterprise subscribers
Slide 54: SoftBank Core Business Strategy
Growth Strategy SoftBank Core Business Strategy １ 2 Smartphone Expansion Enterprise Digitalization
Slide 55: Enterprise: Business solution and others revenue
Enterprise: Business solution and others revenue [JPY] Business solution and 169.2 bn others revenue 145.0 bn 128.9 bn double-digit growth every year FY2017 FY18 FY19 FY2022 [Target]
Slide 56: Leverage DX demand surge in new normal
Double-digit growth for Business solutions Leverage DX demand surge in “new normal” Enterprise Digitalization Industry Digitalization Providing more than 100 types of Solving social issues with the power of digitalization solutions AI, IoT, and 5G with partners Communication Automation Data utilizat
Slide 57: Growth Strategy Beyond Carrier
Growth Strategy Beyond Carrier New Business Fields Yahoo/LINE Telecom Business
Slide 58: Growth Strategy Beyond Carrier
Growth Strategy Beyond Carrier New Business Consumer Enterprise Fields Profit Target Profit Target Profit increase Double-digit profit every year increase every year Business Target Business Target Business solution and others 30 mil smartphone users in year 2023 Double-digit growth Yahoo/LINE Telec
Slide 59: Yahoo New Business Fields
Yahoo New Business Fields Profit Target Profit Target Profit Operating income increase / ¥225 bn in FY2023 Reduce losses on equity method investments Business Target Business Target First half of To achieve No. 1 in EC 2020s transaction value in Japan Peak out loss on PayPay Expansion of PayPay Mall
Slide 60: Strategies for JPY 1 tn Operating Income
Strategies for JPY 1 tn Operating Income 1 PayPay as a Platform 2 Smartphone Expansion and Enterprise DX 3 Cost Containment 4 Financing and Shareholder Returns
Slide 61: Cost Containment Strategy
Structural Reform Cost Containment Strategy １ 2 Cost efficiency through Keep fixed costs flat group synergies
Slide 62: Cost Strategy: Flat Fixed Costs
Cost Strategy 1 Flat Fixed Costs [JPY] Fixed costs Yahoo segment Depreciation & amortization (Excl. Yahoo Network segment) Fixed Costs (Excluding Yahoo) related Operating expenses 1 tn /year Personnel expenses expenses, Sales c. tn4 per year etc. c. commissions and others Cost of goods sold Variable
Slide 63: Cost Strategy: Flat Fixed Costs
Cost Strategy 1 Flat Fixed Costs [JPY] Reference SoftBank Consolidated Business Revenue growth 5.5 tn 4.9 tn Thorough cost management Excl. Yahoo Cost Cost reduction Maximizing Fixed increase costs associated through cost with growth efficiency operation efficiency 1 tn ＋50 bn -50 bn 1 tn Flat FY201
Slide 64: Target ¥50 bn cost reduction through 2 pillars
Cost Strategy 1 Flat Fixed Costs Target ¥50 bn cost reduction through 2 pillars Productivity improvement and workstyle reform through digitalization Network efficiency and optimization Optimization of equipment after termination １ Digitization of mobile shop operations １ of PHS, 3G, etc. Remote リモート
Slide 65: Seek further cost reduction through group synergies
Cost Strategy ２ Group Synergies Seek further cost reduction through group synergies Cost reduction through Cost reduction through joint procurement in-house development Joint procurement Actively leverage group resources by SoftBank and Z Holdings E.g.) In-house settlement services Within our group
Slide 66: Strategies for JPY 1 tn Operating Income
Strategies for JPY 1 tn Operating Income 1 PayPay as a Platform 2 Smartphone Expansion and Enterprise DX 3 Cost Containment 4 Financing and Shareholder Returns
Slide 67: SoftBank Financial Strategy
SoftBank Financial Strategy １ Generation of stable free cash flow Improvement of High and stable 2 3 shareholder returns financial leverage
Slide 68: Generation of Stable Free Cash Flow
１ Generation of Stable Free Cash Flow [Free cash flow formula] [JPY bn] Operating cash flow CAPEX Investment in growth Including 5G expansion, M&A investments for future growth Increase with maintain at level of Budget of business growth 400 bn 50~70 bn Ref）Adj. EBITDA 1,700 1,630 400 400 400 50~70
Slide 69: Generation of Stable Free Cash Flow
１ Generation of Stable Free Cash Flow [Free cash flow formula] [JPY bn] CAPEX 400 level Adj. FCF Investments in growth Adj. FCF 50~70 670+ Impact from IFRS 16 670+ bn FCF from previous definition every year 550 （FY2019 Actual 644.7） (Notes) Adjusted free cash flow = free cash flow ± total cash flows
Slide 70: Generation of Stable Free Cash Flow: Use of Cash
１ Generation of Stable Free Cash Flow [Free cash flow formula] [JPY bn] CAPEX Use of Cash 400 level Investments in Adj. FCF 2 Improvement of growth 670+ financial leverage 50~70 Impact from IFRS 16 FCF from previous definition 3 High and stable 550 shareholder returns (Notes) Adjusted free cash flow
Slide 71: Improvement of financial leverage and shareholder returns
2 Improvement of 3 High and stable financial leverage shareholder returns Net Leverage Ratio No dividend reduction every year / total shareholder return ratio of c. 85％ Improve from 2.4x (3-year weighted average)*1 86＋α DPS in JPY Share 85 86 buyback 2.7x 2.4x 75 Dividend 2.4x 2.3x Includes impact f
Slide 72: To Achieve JPY 1 tn Operating Income
Summary To Achieve JPY 1 tn Operating Income 1 Enhance synergies centered on PayPay platform Target 30 mil smartphones and double-digit business 2 solutions revenue growth annually Keep fixed costs flat by reducing JPY 50 bn 3 telecom costs Improve financial leverage and maintain total 4 shareholder
Slide 73: FY2022 Targets
FY2022 Targets [JPY] Revenue 5.5 tn Operating 1 tn Net Income 530 bn Income 5.5 tn 4.9 tn 4.9 tn 4.7 tn 1 tn 912 bn 920 bn 818 bn 530 bn 462 bn 473 bn 485 bn FY18 FY19 FY20 FY22 FY18 FY19 FY20 FY22 FY18 FY19 FY20 FY22
Slide 74: Corporate Philosophy
Corporate Philosophy Information Revolution ─ Happiness for everyone
Slide 75: SoftBank
SoftBank