Softbank Group Corp. · TSE:9984
Softbank — FY2019 Earnings Presentation
61 slides from Softbank's earnings presentation, May 18, 2020
Slide 1: Earnings Results for the Fiscal Year ended March 31, 2020
Earnings Results for the Fiscal Year ended March 31, 2020 May 18, 2020
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: Great Depression
1929 Great Depression 2
Slide 4: One tenth
Dow Jones Industrial Average Peak before Great Depression USD 381 (Sep. 1929) One tenth (1929 - 1932) Record-low after Great Depression USD 41 (Jul. 1932) 1929 ’32 ’35 ’38 ’41 ’44 ’47 ’50 ’53 (CY) (Source) S&P Capital IQ 3
Slide 5: 25 years to recover
Dow Jones Industrial Average Peak before Recovered to Great Depression pre-Great Depression level USD 381 USD 383 (Sep. 1929) (Nov. 1954) 25 years to recover (1929 - 1954) Record-low after Great Depression USD 41 (Jul. 1932) 1929 ’32 ’35 ’38 ’41 ’44 ’47 ’50 ’53 (CY) (Source) S&P Capital IQ 4
Slide 6: Novel Coronavirus
2020 Novel Coronavirus 5
Slide 7: Rapid expansion
Cumulative Confirmed Cases (Global) (Cases) 4.53m Rapid expansion Jan. 2020 Feb. 2020 Mar. 2020 Apr. 2020 May 2020 As of May 17, 2020 (Source) World Health Organization 6
Slide 8: Sharp decrease
Travel (Change in TSA checkpoint travel numbers compared to the same day of the week in the previous year) Sharp (% 0 -10 -20 -30 decrease -40 -50 -60 -70 -80 -90 -91% -100 Mar. 2020 Apr. 2020 May 2020 As of May 16, 2020 (Source) Transportation Security Administration 7
Slide 9: Significant reduction
Automotive Industry (Mar. sales volume of new passenger cars* -48% 2.02m Significant -38% reduction 1.60m 1.26m -57% 1.04m 0.99m 0.57m Mar. 2019 Mar. 2020 Mar. 2019 Mar. 2020 Mar. 2019 Mar. 2020 (Source) China Association of Automobile Manufacturers, Bureau of Economic Analysis, European Automobile
Slide 10: Sales decreased
Restaurant (Sales, calculated assuming Apr. 1 through Apr.10, 2019 was 100) 100 Sales decreased 80% (YoY) 22 ’19 ’20 (Apr. 1 - Apr. 10) (Apr. 1 - Apr. 10) (Source) National Restaurant Association Results of a survey of more than 6,500 restaurant operators across the U.S. 9
Slide 11: Impact on 2.7bn people
Workforce (Global) Impact on 2.7bn people 81% * of global workforce (Source) International Labour Organization *As of Apr. 7. Share of world's entire workforce that were impacted from complete or partial workplace closures due to COVID-19, out of world’s entire workforce (3.3bn people). 10
Slide 12: Unprecedented Crisis
Unprecedented Crisis 11
Slide 13: Consolidated Results
Consolidated Results 12
Slide 14: Consolidated Results
Consolidated Results (JPY bn) FY18 FY19 Change YoY Net sales 6,093.5 6,185.1 +91.6 +1.5% (USD 56.8bn) EBIT 2,073.6 -1,364.6 -3,438.2 - (USD -12.5bn) Net income 1,411.2 -961.6 -2,372.8 - (USD -8.8bn) Net income: net income to attributable to owners of the parent USD 1 = JPY 108.83 (as of Mar. 31, 202
Slide 15: Net Sales
Net Sales (USD 56.8bn) (JPY bn) 6,093.5 6,185.1 4,652.1 4,862.5 SoftBank segment 1,441.4 1,322.6 Others FY18 FY19 USD 1 = JPY 108.83 (as of Mar. 31, 2020 TTM) Others = Arm + Brightstar + “Others” + reconciliations 14
Slide 16: EBIT
EBIT (JPY bn) One-time gain from 2,073.6 Arm China (176.3) 1,256.6 859.8 923.3 SoftBank segment -219.1 -356.6 Others -1,364.6 (USD -12.5bn) -1,931.3 SVF USD 1 = JPY 108.83 (as of Mar. 31, 2020 TTM) segment One-time gain from Arm China: On Jun. 26, 2018, Arm sold 51% of its equity interest in its who
Slide 17: Net Income
Net Income (JPY bn) 1,411.2 -961.6 (USD -8.8bn) FY18 FY19 USD 1 = JPY 108.83 (as of Mar. 31, 2020 TTM) Net income: net income attributable to owners of the parent 16
Slide 18: SoftBank Vision Fund
SoftBank Vision Fund 17
Slide 19: SVF1 portfolio companies
+ JVs / affiliates etc. (15 companies) The investments presented herein are solely for illustrative purposes, have been selected in order to demonstrate examples of SVF1 investments, and do not purport to be a complete list thereof. References to investments included herein should not be construed a
Slide 20: SVF1 Investment Highlights
SVF 1 Investment Highlights (SBG Consolidated basis) * (From SVF1 inception through Mar. 31, 2020) USD 13.4bn Realized gain USD 4.9bn Valuation gain USD 8.5bn Mark up (26 investments) ** SVF1 highlights are provided solely for illustrative purposes and individual investors' results may vary. Past pe
Slide 21: SVF1 Investment Highlights
SVF 1 Investment Highlights (SBG Consolidated basis) * (From SVF1 inception through Mar. 31, 2020) USD 13.4bn USD -14.2bn Realized loss USD -0.2bn Realized gain USD 4.9bn Valuation loss Valuation gain USD -14.0bn USD 8.5bn Mark up Mark down (26 investments) ** (47 investments) SVF1 highlights are pr
Slide 22: SVF1 Investment Highlights
SVF 1 Investment Highlights (SBG Consolidated basis) * (From SVF1 inception through Mar. 31, 2020) USD 13.4bn USD -14.2bn USD -0.8bn Realized Investment loss loss USD -0.2bn Realized gain USD 4.9bn Valuation loss Valuation gain USD -14.0bn USD 8.5bn Mark up Mark down (26 investments) ** (47 investme
Slide 23: SVF1 Investment Highlights
SVF 1 Investment Highlights (SBG Consolidated basis) * (From SVF1 inception through Mar. 31, 2020) Cumulative USD 81.0bn investment cost Investment loss USD -0.8bn Cumulative investment cost and aggregate market uplift include Flipkart and Nvidia, which were exited in August 2018 and January 2019 re
Slide 24: Commitment Structure of SVF1
Commitment Structure of SVF1 (As of Mar. 31, 2020) USD 98.6bn Preferred Equity Other LPs 7% fixed distribution USD 40.0bn Other LPs Equity Performance-based USD 58.6bn SBG distribution USD 28.1bn * 48% of equity Fixed distribution is subject to the terms and conditions of the SVF1 Limited Partnershi
Slide 25: Valuation Process
<Valuation Process> SBIA is responsible for determining fair values on a quarterly basis in line with the requirements of the AIFM Directive (as issued by the FCA). The SBIA Portfolio Valuations team is functionally independent from portfolio management and may engage external specialists with a hig
Slide 26: Valuation Process
<Valuation Process> SBIA is responsible for determining fair values on a quarterly basis in line with the requirements of the AIFM Directive (as issued by the FCA). The SBIA Portfolio Valuations team is functionally independent from portfolio management and may engage external specialists with a hig
Slide 27: SVF1 Listed Portfolio Companies (as of Mar. 31, 2020)
SVF1 Listed Portfolio Companies (as of Mar. 31, 2020) (USD m) (a) (b) (c) = (b) - (a) (d) = (b) / (a) *1 Investment cost Gross return Gross gain/(loss) *2 Company Gross MOIC to SVF1 to SVF1 to SVF1 Guardant Health 308 1,975 +$1,667 6.4x Slack 334 939 +$605 2.8x Vir Biotechnology 199 775 +$576 3.9x 1
Slide 28: Status of Assets
Status of Assets 27
Slide 29: Alibaba Market Cap.
Market Cap. USD 547bn * Listed in NYSE (Sep. 19, 2014) USD 231bn *Closing price as of May 15, 2020 2014 ’15 '16 ’17 ’18 ’19 '20 (CY) (Source) S&P Capital IQ 28
Slide 30: Revenue (SBKK consolidated)
Revenue (SBKK consolidated) 4,861.2 (USD 44.7bn) (JPY bn) 4,656.8 Up 4% USD 1 = JPY 108.83 (as of Mar. 31, 2020 TTM) FY18 FY19 Actuals for FY2018 have been restated retrospectively to have consolidated Z Holdings Corporation (hereafter “ZHD”, previous Yahoo Japan Corporation) from Apr. 1, 2018. For
Slide 31: Operating Income (SBKK consolidated)
Operating Income (SBKK consolidated) (JPY bn) 911.7 (USD 8.4bn) 818.2 Up 11% USD 1 = JPY 108.83 (as of Mar. 31, 2020 TTM) FY18 FY19 Actuals for FY2018 have been restated retrospectively to have consolidated Z Holdings Corporation (hereafter “ZHD”, previous Yahoo Japan Corporation) from Apr. 1, 2018.
Slide 32: Adjusted FCF (SBKK consolidated)
Adjusted FCF (SBKK consolidated) (JPY bn) 524.2 (USD 4.8bn) Up 2% 512.0 USD 1 = JPY 108.83 (as of Mar. 31, 2020 TTM) FY18 FY19 Adjusted free cash flow = free cash flow ± total cash flows relating to non-recurring transactions with SoftBank Group Corp. + (proceeds from the securitization of installme
Slide 33: Completion of merger
April 1, 2020 Completion of merger 32
Slide 34: Ownership Ratio
Ownership Ratio Public 43% 24% 33% New T-Mobile US Market cap. USD 120bn Percentages are approximate on a fully diluted basis After taking into account the number of shares surrendered to T-Mobile US following the closing of the merger of Sprint and T-Mobile US transaction Market Cap.: closing price
Slide 35: Arm-based Chips Shipped
Arm-based Chips Shipped (cumulative) (chips) 166bn 143bn Rapid increase (Source) Arm, as of April, 2020. Relating to shipments of Arm-based chips up to December 31, 2019 The information herein is provided for illustrative purposes only and is based on company data. There can be no assurances that hi
Slide 36: Arm Adjusted EBITDA
Adjusted EBITDA USD 827m Making up-front investments by hiring more engineers USD 276m The information above has been provided by a third party, and no representation is given regarding its accuracy. There can be no assurances that historical trends will continue throughout the life of SVF1. Past pe
Slide 37: AWS and Arm Partnership
AWS and Arm Partnership (AWS Graviton2 Processors) Believed to be up to 65% faster * than Intel Xeon Could save cost up to 40% ** compared to Intel Xeon The information herein is provided for illustrative purposes only. Certain information presented is provided by a third party, and SBG makes not re
Slide 38: NEOVERSE Ecosystem
NEOVERSE Ecosystem Processor IP for cloud / server NEOVERSE The information herein is provided for illustrative purposes only. There can be no assurances that historical trends will continue throughout the life of SVF1. Past performance is not The companies mentioned are either licensees of, or user
Slide 39: Shareholder Value
Shareholder Value 38
Slide 40: Shareholder value as of Dec. 31, 2019
• Share price: closing price as of Dec. 30 (Japan) closing price as of Dec. 31 (U.S.) • For details, see “Definition and Calculation Method of SBG’s Sum-of-the-parts Valuation” (USD bn) 267 Other 10 SVF 29 55 25 18 43 212 143 Equity value Net debt Shareholder of holdings value As of Dec. 31, 2019 39
Slide 41: Shareholder value as of May 18, 2020
• Share price: closing price as of Dec. 30 (Japan) closing price as of Dec. 31 (U.S.) • Share price: closing price as of May 18 (Japan) closing price as of May 15 (U.S.) • For details, see “Definition and Calculation Method of SBG’s Sum-of-the-parts Valuation” • For details, see “Definition and Calc
Slide 42: Financing Using Alibaba Shares
Financing Using Alibaba Shares (after Apr. 2020) Funding amount Forward contract USD 1.5bn (JPY 163.2bn) Floor contract USD 1.5bn (JPY 163.2bn) Collar contract USD 8.5bn (JPY 925.1bn) Total USD 11.5bn (JPY 1.25t) USD 1 = JPY 108.83 (as of Mar. 31, 2020 TTM) 41
Slide 43: LTV
LTV 14% Net Debt: excluding the sum of the amount equivalent to debt, etc. related to asset-backed financing using Alibaba shares and SBKK shares Equity value of holdings: excluding the sum of the amount equivalent to debt, etc. related to asset-backed financing using Alibaba shares and SBKK shares
Slide 44: Dividend Policy
Dividend Policy (per share) FY2019 FY2020 (Plan) (Plan) Interim dividend JPY 22 TBD (USD 0.2) Year-end dividend JPY 22 TBD (USD 0.2) Annual dividend JPY44 TBD (USD 0.4) FY2020 policy is TBD USD 1 = JPY 108.83 (as of Mar. 31, 2020 TTM) 43
Slide 45: Global Outbreak of Novel Coronavirus
Global Outbreak of Novel Coronavirus 44
Slide 46: Supply at cost to medical staffs
General use / Antibody test kit * surgical masks Supply at cost to medical staffs as Goggles N95 Masks contribution to society Protective suits Face shields *Antibody test kit will be supplied with free of charge 45
Slide 47: Challenges for Unicorns
Challenges for Unicorns (Coronavirus crisis) Rapid decline in demand (sales) Negative FCF 46
Slide 48: 47
47
Slide 49: 48
48
Slide 50: Valley of Coronavirus
Valley of Coronavirus 49
Slide 51: Valley of Coronavirus
Valley of Coronavirus 50
Slide 52: Valley of Coronavirus
Valley of Coronavirus 51
Slide 53: Led by new industries
Automobile Electronic product Oil (Recovery from 1929 Great Depression) Led by new industries then Manufacturing Electricity Food processing 52
Slide 54: Led by new technologies
Online meeting Food delivery Online education (Recovery from novel coronavirus) Led by new technologies Online medical care Online shopping Video streaming service 53
Slide 55: Information Revolution Happiness for everyone
Information Revolution Happiness for everyone 54
Slide 56: SoftBank
SoftBank
Slide 57: Appendix
Appendix
Slide 58: SVF1 Listed Portfolio Companies (as of May 15, 2020)
SVF1 Listed Portfolio Companies (as of May 15, 2020) (USD m) (a) (b) (c) = (b) - (a) (d) = (b) / (a) *1 Investment cost Gross return Gross gain/(loss) *2 Company Gross MOIC to SVF1 to SVF1 to SVF1 Guardant Health 308 2,615 +$2,307 8.5x Slack 334 1,002 +$668 3.0x Vir Biotechnology 199 686 +$488 3.5x
Slide 59: SVF1 Snapshot (as of Mar. 31, 2020)
SVF1 Snapshot (as of Mar. 31, 2020) (USD billion) (a) (b) (c) = (b) - (a) *2 *1 Investment cost Gross return Gross gain/(Loss) to SVF1 to SVF1 to SVF1 (A) Listed company total $9.6 $11.0 +$1.4 (B) Private & exited company total $71.4 $69.2 -$2.2 (C)=(A)+(B) SVF 1 total (SBG consolidated basis) $81.0
Slide 60: Definition and Calculation Method of SBG's Sum-of-the-parts Valuation
Definition and Calculation Method of SBG’s Sum-of-the-parts Valuation (as of May 18, 2020) i. Net debt • Net debt = net interest-bearing debt (SBG) = Net debt (SBG) • Net debt (SBG) = gross debt (SBG) - cash position, etc (SBG) • gross debt (SBG) = gross interest-bearing debt (SBG) = Gross debt (Con
Slide 61: Definition and Calculation Method of SBG's Sum-of-the-parts Valuation
Definition and Calculation Method of SBG’s Sum-of-the-parts Valuation (as of Dec 31, 2019) i. Net debt • Net debt = net interest-bearing debt (SBG) = Net debt (SBG) • Net debt (SBG) = gross debt (SBG) - cash position, etc (SBG) • gross debt (SBG) = gross interest-bearing debt (SBG) = Gross debt (Con