Softbank Group Corp. · TSE:9984
Softbank — H1 FY2016 Earnings Presentation
61 slides from Softbank's earnings presentation, Nov 7, 2016
Slide 1: Earnings Results for the 6-month Period Ended September 30, 2016
November 7, 2016 Earnings Results for the 6-month Period Ended September 30, 2016 Masayoshi Son
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
Consolidated Results 2
Slide 4: Consolidated Results
Consolidated Results (JPY bn) FY2015 FY2016 H1 H1 Change Ratio Net sales 4,281.2 4,271.8 -9.4 -0.2% Adjusted EBITDA 1,250.5 1,333.9 +83.4 +7% EBIT 631.9 653.9 +22.0 +4% Net income 426.7 766.2 +339.5 +80% Net income: net income attributable to owners of the parent 3
Slide 5: Net Sales
Net NetSales Sales (JPY bn) Down 0.2% 4,281.2 4,271.8 ARM Earnings reflected since Sept. 6, 2016 Sprint 1,946.2 1,722.5 Impact of strong yen (-JPY 255.0bn) ($ 16.0bn) ($ 16.3bn) Increase in dollar terms Distribution & other 570.9 578.2 409.5 Yahoo Japan 248.8 Consolidation of ASKUL Domestic Telco 1,
Slide 6: Adjusted EBITDA: Steady growth
Adjusted EBITDA 1,333.9 (JPY bn) Steady growth 2003 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 (FY) H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 Japanese-GAAP IFRSs *FY2013-14: excluding impact of GungHo & Supercell 5
Slide 7: Adjusted EBITDA
Adjusted EBITDA (JPY bn) 1,333.9 1,250.5 516.9 Sprint Cost reduction effort Up 7% Impact of strong yen (-JPY 75.8) 508.8 ($ 4.9bn) Up 17% in dollar terms ($ 4.2bn) Distribution, ARM & other 118.5 Yahoo Japan 104.4 Domestic Telco 644.7 691.3 Revenue increase & cost reduction effort (Exchange rate) FY
Slide 8: EBIT: Steady growth
EBIT 653.9 (JPY bn) Steady growth 2003 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 (FY) *FY2013-14: excluding impact of GungHo & Supercell H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 *FY2013: excluding one-time gain from consolidation of GungHo & WILLCOM Japanese-GAAP IFRSs 7
Slide 9: EBIT
EBIT (JPY bn) 653.9 Up 4% 631.9 Sprint Impact of strong yen (-JPY 16.0bn) 81.4 104.6 ($ 0.7bn) ($ 1.0bn) Up 48% in dollar terms 150.9 99.4 Yahoo Japan One-time gain from consolidation of ASKUL (JPY 59.4bn) Domestic Telco 465.9 426.0 Revenue increase & cost reduction effort (Exchange rate) FY2015Q1:
Slide 10: Net Debt EBITDA Multiple (Consolidated)
Net Debt EBITDA Multiple (Consolidated) 6.2x (after Vodafone K.K. acquisition) Toward 3.5x within couple of years 4.0x 3.8x *1 Adjusted EBITDA for fiscal 2014 has been revised retrospectively due to GungHo becoming an equity 2006 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’16 method associate. June Mar
Slide 11: Status of Major Segments
Status of Major Segments 10
Slide 12: Domestic Telco Highlights
Domestic Telco Highlights 1. Robust results (EBIT +9%) 2. Accelerate growth via smartphones & FTTH 3. On track to generate JPY 500bn in FCF in FY2016 Investment Assets 11
Slide 13: EBIT Domestic Telco
EBIT EBIT Domestic Telco (JPY bn) 465.9 426.0 Solid growth Up 9% *FY2012-2016: IFRSs 2012 ’13 ’14 ’15 ’16 (FY) After FY2014: Domestic Telecommunications segment Up to FY2013: Mobile Communications segment + Fixed-line segment + H1 H1 H1 H1 H1 Broadband Infrastructure segment 12
Slide 14: Cumulative Subscribers (Main Subscribers)
Cumulative Subscribers (Main Subscribers) EBIT Domestic Telco 31.61mil 32.30mil Steady growth YoY +690k 2014 ’15 ’16 (FY) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 13
Slide 15: Churn (Main Subscribers)
Churn (Main Subscribers) Domestic Telco Significantly 1.28% 1.06% improved Improved SoftBank brand (Impact of bundled services with FTTH, etc.) 2014 ’15 ’16 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 (FY) 14
Slide 16: Customer Focused Campaigns
Customer Focused Campaigns Domestic Telco Meeting various users’ needs (1) Cost conscious (2) Large data plan (3) Long-time users Giga Monster Long-time use *2 benefits *1 20GB JPY 6,000/month JPY 1,980/month JPY 15,000 worth of points *4 63% OFF * 3 (4) Fiber Home Discount Hikari Set 2,000/month of
Slide 17: Cumulative Subs (FTTH Service)
Cumulative Subs (FTTH Service) Domestic Telco 2.7mil Rapid growth SoftBank Hikari 0.71mil 2014 ’15 ’16 (FY) Q4 Q1 Q2 Q3 Q4 Q1 Q2 *SoftBank Hikari includes SoftBank Air. 16
Slide 18: Free Cash Flow
Free Cash Flow Domestic Telco (JPY bn) 326.0 Significantly 182.6 improved 75.9 FY2014 FY2015 FY2016 H1 H1 H1 Free Cash Flow = operating cash flow + investing cash flow *IFRSs Excluding eliminations within SoftBank Group Corp. 17
Slide 19: FY2016 Forecast
FY2016 Forecast Continue profit growth 1 (toward 12 consecutive periods) 2 JPY 500bn in FCF Domestic Telco 3 Focus on smartphones & FTTH 4 Expand business areas and synergies with Yahoo Japan *Toward 12 consecutive periods: after FY2014: Domestic Telecommunications segment. Up to FY2013: total of Mo
Slide 20: Sprint Highlights
Domestic Telco Highlights 1. Robust results (adjusted EBITDA +17%) 2. Turnaround strategy making steady progress 3. Adjusted FCF around break-even in FY2016 Investment Assets *17%: in dollar terms, USGAAP 19
Slide 21: Net Additions (Postpaid Phone)
Net Additions (Postpaid Phone) 347k 62k More than 5x Net port positive for YoY 2 consecutive quarters -399k -500k Paul Marcarelli 2013 ’14 ’15 ’16 (FY) *Q2: July - September Q2 Q2 Q2 Q2 *Sprint platform *Net port positive: MNP from the three major national carriers. 20
Slide 22: Churn (Postpaid Phone)
Churn (Postpaid Phone) 2.12% Best in Sprint history 1.49% 1.37% 1.0% 2014 ’15 ’16 (FY) *Q2: July - September Q2 Q2 Q2 *Sprint platform 21
Slide 23: Net Operating Revenue
Net Operating Revenue USGAAP (USD bn) Growth 17.6 17.3 16.0 $ 16.3bn 2013 ’14 ’15 ’16 (FY) H1 H1 H1 H1 *H1: April - September 22
Slide 24: Cost Reduction
Cost Reduction USGAAP (USD bn) $ 9.2bn $ 8.1bn Significant Amount of reduction reduction SG&A -$ 1.1bn Cost of services 2015 2016 (FY) H1 H1 *H1: April - September 23
Slide 25: Adjusted EBITDA
Adjusted EBITDA $ 4.8bn USGAAP (USD bn) Joined 4.1 SoftBank Group 2.7 2.7 3.2 Up 17% 2012 ’13 ’14 ’15 ’16 (FY) H1 H1 H1 H1 H1 *H1: April - September 24
Slide 26: Adjusted Free Cash Flow
Adjusted Free Cash Flow USGAAP (USD bn) $ 1.2bn Significantly -0.3 improved -0.6 -1.3 Joined SoftBank Group -2.3 *H1: April - September 2012 ’13 ’14 ’15 ’16 (FY) Adjusted FCF: the cash provided by operating activities + the cash used in investing activities (excluding short-term investments) + the p
Slide 27: RootScore Awards
RootScore Awards 137 Significantly 90 improved CY2016 CY2016 Rankings based on RootMetrics 70 Metro RootScore Reports (January-October 2016) for mobile performance as tested on best available plans and H1 H2 devices on 4 mobile networks across all available network types. Your experience may vary. T
Slide 28: FY2016 Forecast
FY2016 Forecast 1 Adjusted EBITDA $ 9.5-10.0bn 2 Operating income $ 1.2-1.7bn 3 Cash CAPEX less than $ 3.0bn 4 Adjusted FCF around break-even Cash CAPEX excluding the CAPEX associated with purchasing leased devices in indirect channels Adjusted FCF: the cash provided by operating activities + the ca
Slide 29: Yahoo Japan Highlights
Domestic Telco Highlights 1. Continue profit growth 2. Display advertising driving growth 3. Surge in shopping transaction value Investment Assets 28
Slide 30: Adjusted Net Income
Adjusted Net Income (JPY bn) 33.6 Continued growth (FY) Adjusted net income: Adjusted net income attributable to owners of the parent 2002 ’04 ’06 ’08 ’10 ’12 ’14 ’16 (FY) *Up to FY2012: Japanese-GAAP, 2013-: IFRSs *Net income attributable to owners of the parent for FY15 Q2 (JPY 91.3bn) has been ad
Slide 31: Advertising Revenue
Advertising Revenue 69.4 (JPY bn) 65.7 Driving growth 34.5 Display 29.6 (+17%) ads Search ads (FY) 2013 ’14 ’15 ’16 (FY) Q2 Q2 Q2 Q2 30
Slide 32: Shopping Transaction Value
Shopping Transaction Value ショッピング (JPY bn) 101.1 ＜赤＞ PANTONE 185 DIC 156 M91%+Y76% ＜グレー＞ PANTONE Cool Gray 11 DIC 541 BL80% #545454 Gray R255・G0・B51 ●2行ロゴ リンク用ロゴなどスペースが狭い場合に使用できます。 79.1 Significant growth ショッピング ●その他色指定 白抜き利用の場合（背景色は任意） ショッピング ※紫ロゴは原則使用しないでください ＜紫＞ ショッピング PANTONE 259 DIC 227 C65%+M1
Slide 33: ARM Highlights
Domestic Telco Highlights 1. Uninterrupted execution of strategy 2. Strong growth continues with 7.6bn ARM-based chips shipped 3. Major design wins across industry Investment Assets 32
Slide 34: Sharing Vision with ARM
Sharing Vision with ARM Sept. 6-7, 2016 San Jose office 33
Slide 35: Support and Accelerate ARM's Strategy
Support and Accelerate ARM’s Strategy Networking Embedded Mobile Computing & Servers 34
Slide 36: Mobile
Mobile Over 95% smartphones contain at Progress least one ARM-based chip Revenue per smartphone increases Strategy as customers deploy ARM’s latest technology 35
Slide 37: Latest technologies create new revenue streams
Latest technologies create new revenue streams The New Revolution Virtual Reality Coaster, “Six Flags Magic Mountain” 36
Slide 38: Networking & Servers
Networking & Servers ARM technology adopted by many Progress leading semiconductor companies Intelligent networking infrastructure, Strategy energy-efficient servers 37
Slide 39: Selected ARMv8-A for Post-K Supercomputer
Selected ARMv8-A for Post-K Supercomputer Will perform 100x more than current generation (c) RIKEN 38
Slide 40: Embedded Computing
Embedded Computing Two new processors for secure Progress embedded processing Connecting billions of smart sensors Strategy into the Internet of Things 39
Slide 41: First embedded processors designed for secure connected devices
First embedded processors designed for secure connected devices New Processors (Announced Oct. 25) Cortex-A5 Cortex-M33 Cortex-M23 80% 95% smaller smaller 40
Slide 42: ARM Powered SoCs Shipped
ARM Powered SoCs Shipped 7.6bn Explosive growth continues 2006 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 (CY) H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 41
Slide 43: FY2016 Forecast
FY2016 Forecast Continue to invest in 1 new technology and markets Gain more share in 2 long-term growth markets Create new opportunities 3 from the Internet of Things 42
Slide 44: Alibaba Highlights
Domestic Telco Highlights Strategy Market leadership in key markets Progress Alibaba showing strong growth Investment Assets 43
Slide 45: Alibaba Total Revenue
Total Revenue JPY 552.4bn USGAAP 357.2bn Up 55% Driven by Chinese e-commerce etc. (Source) Created by SoftBank Group Corp. based on publicly available historical 2011 2012 2013 2014 2015 2016 information published by Alibaba Group Holding Limited USD 1.00 = JPY 106.43, USD 1.00 = RMB 6.606 July - Se
Slide 46: Alibaba Non-GAAP Net Income
Non-GAAP Net Income JPY 209.9bn USGAAP Non-GAAP (Excluding the gains and losses related to share based compensation expenses, amortization of intangible assets, revaluation of investments etc.) 149.0bn Up 41% (Source) Created by SoftBank Group Corp. based on publicly available historical 2011 2012 2
Slide 47: Accelerating Growth Strategy
Accelerating Growth Strategy 46
Slide 48: Singularity: Birth of extra intelligent
Singularity Birth of extra intelligent 47
Slide 49: Singularity: All industries will be redefined
Singularity Future becomes predictable World without accidents Life expectancy exceeds 100 years All industries will be redefined 48
Slide 50: SoftBank will lead the largest project of human kind
Singularity SoftBank will lead the largest project of human kind 49
Slide 51: SoftBank Vision Fund
SoftBank Vision Fund 50
Slide 52: SoftBank Vision Fund: Up to $100bn
SoftBank Vision Fund SoftBank Saudi Arabia (PIF) Other >$ 25bn + <$ 45bn + investors (currently negotiating) (JPY 2.5t) (JPY 4.5t) Up to $ 100bn Investments over the (JPY 10t) next 5 years 51
Slide 53: Investment Track Record: IRR 44%
Investment Track Record $ 110bn Internet companies IRR 44% (18 years) 15x $ 7bn Accumulated investment Accumulated return (1999-2016) USD 1.00 = JPY 102, as of September 20, 2016 52
Slide 54: Investment Track Record excluding Alibaba: IRR 43%
Investment Track Record Internet companies $ 32bn excluding Alibaba IRR 43% (18 years) 4x $ 7bn Accumulated investment Accumulated return (1999-2016) USD 1.00 = JPY 102, as of September 20, 2016 53
Slide 55: Investment Track Record incl. SBM, Sprint: IRR 43%
Investment Track Record $ 190bn Internet companies (incl. SBM,Sprint) IRR 43% (18 years) 7x $ 30bn Accumulated investment Accumulated return (1999-2016) *1 USD 1.00 = JPY 102, as of September 20, 2016 54 *2 Includes SoftBank Mobile Business (former Vodafone Japan) and Sprint
Slide 56: Investment Track Record vs Major Global Funds
Investment Track Record (vs 10 Major Global Funds) SoftBank 44% Fund A 15% Fund B 15% IRR Fund C Fund D 10% 14% Global No.1 Fund E 9% Fund F 8% Fund G 8% Fund H 8% Fund I 8% Fund J 4% 55
Slide 57: Meeting with Deputy Crown Prince of Saudi Arabia
Meeting with his Royal Highness, Deputy Crown Prince Mohammed Bin Salman of the Kingdom of Saudi Arabia (Saudi Arabia, October 2016) 56
Slide 58: Future Financial Strategy
Future Financial Strategy Improve leverage to 3.5x within couple of years Strategic investments above 10s of billions of JPY will be executed through Fund 57
Slide 59: SoftBank Vision Fund
SoftBank Vision Fund Become biggest investor in technology sector 58
Slide 60: Toward Further Growth
Toward Further Growth — SoftBank
Slide 61: 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 +