Softbank Group Corp. · TSE:9984

Softbank — H1 FY2014 Earnings Presentation

80 slides from Softbank's earnings presentation, Nov 4, 2014

  1. Slide 1: Earnings Results for the 6-month Period Ended September 30, 2014

    Earnings Results for the 6-month Period Ended September 30, 2014 November 4, 2014 SoftBank Corp.

  2. 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

  3. Slide 3: SoftBank = Goose

    SoftBank = Goose 2

  4. Slide 4: Highlights

    Highlights 1. Net sales over JPY 4t 2. Net income up 37% YoY 3

  5. Slide 5: Consolidated Results of Operations

    Consolidated Results of Operations 4

  6. Slide 6: Net Sales: Record high

    Net Sales 4.1t (JPY) Record high for 2 consecutive periods 2003 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 (FY) H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 Japanese-GAAP IFRSs 5

  7. Slide 7: Net Sales vs peers

    Net Sales (JPY) 4.1t SoftBank 2.2t NTT DOCOMO 2.1t KDDI 2005 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 Japanese-GAAP IFRSs 6

  8. Slide 8: EBITDA: Record high

    EBITDA (JPY) 1.1t Record high for 11 consecutive periods 2003 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 Japanese-GAAP IFRSs 7

  9. Slide 9: EBITDA vs peers

    EBITDA (JPY) 1.1t SoftBank 743.8bn NTT DOCOMO 650.2bn KDDI 2005 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 (FY) H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 Japanese-GAAP IFRSs 8

  10. Slide 10: EBIT (Operating income)

    EBIT (Operating income) 737.2bn (JPY) Temporary gains from consolidation of GungHo, WILLCOM, etc. 249.0bn 596.7bn 19% decrease 2003 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 (FY) H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 Japanese-GAAP IFRSs 9

  11. Slide 11: EBIT excluding temporary gains

    EBIT (Operating income) 737.2bn (JPY) Temporary gains from consolidation of GungHo, WILLCOM, etc. 249.0bn 596.7bn 22% increase excluding temporary gains 488.2bn 2003 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 (FY) H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 Japanese-GAAP IFRSs 10

  12. Slide 12: EBIT vs peers

    EBIT (Operating income) (JPY) 596.7bn SoftBank 399.6bn NTT DOCOMO No.1 384.8bn KDDI ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 Japanese-GAAP IFRSs *Excluding temporary gains from consolidation of GungHo, WILLCOM, etc. (JPY 249.0bn) 11 in H1 FY2013

  13. Slide 13: Net Income

    Net Income 560.7bn (Net income attributable to owners of the parent) (JPY) 410.2bn 37% increase Including dilution gain of JPY 385.6bn from changes in equity interest related to Alibaba 2003 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 (FY) H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 Japanese-GAAP IFRSs 12

  14. Slide 14: Summary of Consolidated Operation Results

    Summary of Consolidated Operation Results (JPY) FY13 / H1 FY14 / H1 Change YoY Net sales 2,598.6bn 4,104.4bn + 1,505.8bn 158% EBITDA 838.1bn 1,122.6bn + 284.5bn 134% EBIT 737.2bn 596.7bn - 140.5bn 81% (Operating income) *excluding temporary gains 488.2bn 596.7bn + 108.5bn 122% Net income 410.2bn 560

  15. Slide 15: SoftBank Enterprise Value

    SoftBank Enterprise Value 14

  16. Slide 16: SoftBank Market Cap (Conceptual diagram)

    SoftBank Market Cap (Conceptual diagram) Sprint Domestic telecommunications businesses, etc. Yahoo Japan, GungHo, Supercell Alibaba 15 Market cap

  17. Slide 17: Alibaba Group

    (EV paso ha Group

  18. Slide 18: Listed on the New York Stock Exchange

    Listed on the New York Stock Exchange (September 19, 2014) 17

  19. Slide 19: me BY

    = me BY Sa ©) i] ql, - Sky Beene ty eeu a

  20. Slide 20: Market Cap: World No. 10

    Market Cap Market Cap (JPY) 1 Apple 73t 2 Exxon Mobil 46t 3 Microsoft 45t Google 43t World No. 10 4 5 Berkshire Hathaway 39t 6 Johnson & Johnson 34t 7 Wells Fargo 32t 8 GE 29t 9 China Mobile 29t 10 Alibaba 29t 11 Wal-Mart 28t 12 Roche 28t *S&P Capital IQ (Nov. 3, 2014) 19

  21. Slide 21: Market Cap (IT Companies): World No. 4

    Market Cap (IT Companies) Market Cap (JPY) 1 Apple 73t 2 Microsoft 45t 3 Google 43t Alibaba 29t World No.4 4 5 Facebook 23t 6 Oracle 20t 7 Samsung 19t 8 Intel 19t 9 IBM 19t 10 Tencent 17t 11 Amazon 16t 12 QUALCOMM 15t *S&P Capital IQ (Nov. 3, 2014) excluding telecom operators 20

  22. Slide 22: Gross Merchandise Volume: Rapid growth

    Gross Merchandise Volume (JPY) 25t (30t for LTM) 25t 20t Rapid growth 15t 16t (combined market cap: JPY 20t) 10t 5t (Source) Created by SoftBank Corp. based on respective companies' publicly available historical information and Form F-1 published by Alibaba Group Holding Limited USD1.00 = JPY 100 20

  23. Slide 23: Revenue: Rapid growth

    Revenue (JPY) 452.9bn 311.9bn Rapid growth 2007 ’08 ’09 ’10 ’11 ’12 ’13 ’14 (Source) Created by SoftBank Corp. based on Yahoo! Inc.’s publicly available historical information Jan. - June Jan. - June Jan. - June Jan. - June Jan. - June Jan. - June Jan. - June Jan. - June USD1.00 = JPY100 22

  24. Slide 24: Net Income (after tax)

    Net Income (after tax) (JPY) 291.1bn 137.5bn 2x YoY (Source) Created by SoftBank Corp. based on Yahoo! Inc.’s publicly available historical information 2007 ’08 ’09 ’10 ’11 ’12 ’13 ’14 USD1.00 = JPY100 Jan. - June Jan. - June Jan. - June Jan. - June Jan. - June Jan. - June Jan. - June Jan. - June Ne

  25. Slide 25: China e-Commerce Market

    China e-Commerce Market (JPY) 96t China 3x in 4 years 32t 2010 ’11 ’12 ’13 ’14 ’15 ’16 ’17 (CY) (Source) Created by SoftBbank Corp. based on data from iResearch RMB 1 = JPY 17 24 (Forecast)

  26. Slide 26: Toward further growth

    ep, Toward further growth

  27. Slide 27: Yahoo Japan

    YAHOO! JAPAN

  28. Slide 28: Net Income: Highest ever

    Net Income (Net income attributable to owners of the parent) 66.6 (JPY bn) Highest ever ’96 ’98 ’00 ’02 ’04 ’06 ’08 ’10 ’12 ’14 (FY) (Source) Created by SoftBank Corp. based on companies’ publicly available historical information H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 Non-consolidated basis prior to 2000 Jap

  29. Slide 29: Number of Stores: 10x in a year

    Number of Stores ショッピング (After screening completed) 190k ショッピング 10x ＜赤＞ ＜グレー＞ PANTONE 185 PANTONE Cool Gray 11 DIC 156 DIC 541 M91%+Y76% BL80% R255・G0・B51 #545454 Gray in a year ●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。 ショッピング 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） ※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 C6

  30. Slide 30: Number of Available Products

    ショッピング Number of Available Products 120mil ショッピング 50% increase ＜赤＞ PANTONE 185 DIC 156 M91%+Y76% R255・G0・B51 ＜グレー＞ PANTONE Cool Gray 11 DIC 541 BL80% #545454 Gray ●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。 ショッピング 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） ※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%+M100%+K15% R

  31. Slide 31: Domestic Telecommunications Businesses

    (Domestic Telecommunications Businesses) 30

  32. Slide 32: Mobile EBIT: 9x growth

    Mobile EBIT (Mobile operating income) 401.6bn (JPY) 356.5bn 9x growth after acquisition 43.5bn 2002 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 (FY) H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 *FY2006 - 2011: operating income of Mobile Communications business Japanese-GAAP IFRSs FY2012 - 2014: segmen

  33. Slide 33: Smartphone connectivity No.1

    Smartphone connectivity No.1 Data Connectivity Call Connectivity (smartphone) (smartphone) 99% SoftBank 99.5% SoftBank 98.8% 99.2% 99.0% 98% NTT DOCOMO NTT DOCOMO 97.5% 98.8% au 98.5% 97.5% 97% 98.0% 96% au 97.5% 97.6% 95% *Statistics analyzed by Agoop Corp. Platinum band-compatible smartphone data

  34. Slide 34: Smartphone data communications speed No.1

    Smartphone data communications speed No.1 (Nationwide downlink speed / Analysis of 1.05mil data logs) SoftBank 17.2 Mbps au 14.3 Mbps NTT DOCOMO 13.5 Mbps (Source) Agoop “Analysys of Data Communications Speed of Smartphones” (Sept. 30, 2014) Data collected from July 1, 2014 - Sept. 30, 2014, nationw

  35. Slide 35: iPhone data communications speed No.1

    iPhone 6 data communications speed No.1 (LTE / 4G data downlink speed at major 500 train stations nationwide) SoftBank 37.5 Mbps au 33.1 Mbps NTT DOCOMO 28.0 Mbps (Source) Nikkei BP Consulting Inc. “LTE / 4G Data Communications Speed at Major 500 Train Stations Nationwide” (Oct. 23, 2014) Data colle

  36. Slide 36: iPhone Data Communications Speed No.1 (spots)

    iPhone 6 Data Communications Speed No.1 (Number of spots recording the fastest speed among 3 operators) Measured in 32 spots in Tokyo NTT DOCOMO 4 spots SoftBank 21 spots au 7 spots (Source) Surveyed by kakaku.com (Sept. 22, 2014) 35

  37. Slide 37: Smartphone customer satisfaction No.1

    Smartphone customer satisfaction No.1 Nikkei Personal Computing Mobile Phone / Smartphone ORICON Customer Satisfaction Mobile Service Satisfaction “Personal Use” Survey 2014 Ranking for FY2014 Ranking (Announced on Aug. 29) (Announced on Sept. 2) (Announced on Sept. 4) 36

  38. Slide 38: CAPEX (Japan): Reducing significantly

    CAPEX (Japan) (JPY) Reducing CAPEX 712.5bn significantly 631.6bn 515.0bn 474.1bn 425.0bn 392.6bn 375.0bn 2010 ’11 ’12 ’13 ’14 ’15 ’16 (FY) *Japanese-GAAP: including CAPEX of SoftBank Mobile, SoftBank (Forecast) (Forecast) (Forecast) Telecom, SoftBank BB *IFRSs: including CAPEX of SoftBank Mobile, Ym

  39. Slide 39: EBITDA less CAPEX: Generating FCF

    EBITDA CAPEX (domestic telecommunications businesses only) (domestic telecommunications business only) (JPY) 992.3bn 889.3bn 726.4bn 790.4bn 712.5bn Generating FCF 631.6bn 515.0bn 474.1bn 425.0bn 392.6bn 375.0bn 2010 ’11 ’12 ’13 ’14 ’15 ’16 (FY) *Japanese-GAAP: including CAPEX of SoftBank Mobile, So

  40. Slide 40: Domestic business entering FCF generation stage

    (Domestic Telecommunications Businesses) Domestic business entering FCF generation stage 39

  41. Slide 41: Sprint

    Sprint »

  42. Slide 42: Sprint Platform Postpaid Net Porting Trend

    Sprint Platform Postpaid Net Porting Trend Marcelo’s appointment (Aug. 11, 2014) Improvement Oct. 1, Sept. 30, 2013 2014 41 (Source) Sprint Corporation

  43. Slide 43: Sprint Platform Prime Phone Gross Adds

    Sprint Platform Prime Phone Gross Adds Marcelo’s appointment Improvement (Aug. 11, 2014) 2013 2014 Jan. Sept. 42 (Source) Sprint Corporation

  44. Slide 44: Consolidated Adjusted EBITDA

    Consolidated Adjusted EBITDA 15bn (USD) Maintaining 12.7bn 10bn profit increase 6.7 - 6.9bn (Prior forecast) Increase in customer acquisition costs due to higher gross addition 5.8 - 5.9bn (New forecast) and upgrade volumes, etc. 5bn 5.4bn 4.8bn 2006 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 (CY) *Combined co

  45. Slide 45: Gearing up for transformation with new CEO

    Gearing up for transformation with new CEO 44

  46. Slide 46: FY2014 Consolidated Operation Results Forecast

    FY2014 Consolidated Operation Results Forecast Net sales JPY 8t EBITDA approx. JPY 2t EBIT (Operating income) JPY 1 t (excluding temporary gains) JPY 900bn (after Sprint’s revision) 45

  47. Slide 47: Further increase in enterprise value

    Further increase in enterprise value 46

  48. Slide 48: Winners in China will take the world

    “Winners in China will take the world” Jan. 1, 2000 47

  49. Slide 49: GDP: Toward the world's largest

    250t GDP China (USD) USD 205t 200t Toward 150t the world’s largest 100t US USD 84t 50t Japan USD 16t 2010 2020 2030 2040 2050 (CY) (Source) Created by SoftBank Corp. based on a report issued by Citigroup, “Global Growth Generators” (Feb. 2011) 48

  50. Slide 50: India

    India 49

  51. Slide 51: Becoming the world's top 2 economies

    250t GDP China (USD) USD 205t 200t India USD 180t Becoming 150t the world’s top 2 economies 100t US USD 84t 50t Japan USD 16t 2010 2020 2030 2040 2050 (CY) (Source) Created by SoftBank Corp. based on a report issued by Citigroup, “Global Growth Generators” (Feb. 2011) 50

  52. Slide 52: Population by Age Group (in 2015)

    Population by Age Group (in 2015) Age 0 - 24 Age 25 - 64 Age 65+ India 47% 48% 6% US 33% 52% 15% China 32% 59% 10% Japan 22% 51% 26% (Source) United Nations, World Population Prospects: The 2012 Revision 51

  53. Slide 53: Becoming the world's largest English-speaking country

    Number of English Speakers (today) 270mil Becoming the world’s largest English-speaking country 130mil by 2020 60mil 10mil (Source) US: “Language Use in the United States_2007_acs-12 India: article published by The Time of India (Mar. 2010) UK: 2011 Census (Mar. 2011) Key Findings China UK India US

  54. Slide 54: Becoming the world's largest IT nation

    Number of Software Developers (in 2018) 5.2mil 4.5mil Becoming the world’s largest IT nation 1.9mil 1.3mil Russia China US India (Source) Computer world article 2013 53

  55. Slide 55: India: No.1 online marketplace

    India No.1 online marketplace in India 54

  56. Slide 56: e-Commerce Market (India)

    e-Commerce Market (India) (JPY) 7.6t India 30x in 7 years 0.25t 2012 ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20 ’21 (CY) (Source) Created by SoftBank Corp. based on technopak “E-tailing in India, Unlocking the potential” 55 (Forecast) 1USD = JPY100

  57. Slide 57: Becoming the largest shareholder

    Structure Becoming USD 627mil the largest shareholder 56

  58. Slide 58: Gross Merchandise Volume (annualized)

    Gross Merchandise Volume (annualized) (USD) 2.1bn Rapid increase June 2012 Oct. 2014 57

  59. Slide 59: India's largest platform for cab booking

    India India’s largest and most popular platform for cab booking 58

  60. Slide 60: Structure

    Structure other existing shareholders USD 210mil ANI Technologies Pvt. Ltd. 59

  61. Slide 61: Registered cabs and cab users

    Registered cabs (over 33k) mobile platform for cab booking Cab users 60

  62. Slide 62: Bookings (annualized): 9x in 10 months

    Bookings (annualized) 9x in 10 months Jan. 2014 Oct. 2014 61

  63. Slide 63: Market Share (India)

    Market Share (India) Others India 5% 5% 14% 60% 16% * Market Share based on available or estimated data of registered vehicles on respective platforms 62

  64. Slide 64: Indonesia: No.1 online marketplace

    Indonesia No.1 online marketplace in Indonesia 63

  65. Slide 65: Online Shopping Market (Indonesia)

    Online Shopping Market (Indonesia) (USD) 4.0bn Indonesia 4x in 4 years 1.1bn 2009 ’10 ’11 ’12 ’13 ’14 ’15 ’16 (CY) (Source) solidiance “E-COMMERCE MARKET OPPORTUNITY LANDSCAPE Indonesia” (June 10, 2014) 64 (Forecast)

  66. Slide 66: Structure

    Structure Sequoia Capital, SB Pan Asia Fund (SBVK) USD 100mil 65

  67. Slide 67: Gross Merchandise Volume (annualized)

    Gross Merchandise Volume (annualized) Toward 100mil (USD) Rapid growth 2009 2010 2011 2012 2013 2014 *100mil: annualized number based on the estimated GMV for Nov. 2014 66

  68. Slide 68: Internet Companies Investment Record

    Internet Companies Investment Record 67

  69. Slide 69: Internet Companies Investment Record (1 of 2)

    Internet Companies Investment Record (1 of 2) Accumulated Accumulated Investment Date of initial Company investment return period investment Date of valuation IRR Return (JPY bn) (JPY bn) (year) 1 Alibaba 10.5bn 9,252.1bn 15 2000/02 2014/11 80% 880x 2 Yahoo Japan 7.7bn 1,116.8bn 19 1996/01 2014/10 7

  70. Slide 70: Internet Companies Investment Record (2 of 2)

    Internet Companies Investment Record (2 of 2) Accumulated Accumulated Investment Date of initial Company investment return period investment Date of valuation IRR Return (JPY bn) (JPY bn) (year) SKY Perfect JSAT 13 Corporation 14.6bn 27.9bn 5 1996/12 2002/03 19% 2x 14 PPLive 20.7bn 27.8bn 3 2011/01

  71. Slide 71: Internet Companies Investment Record: IRR 45%

    Internet Companies Investment Record JPY 11t 669.9bn IRR 45% (return 30x) Avg. 9.5years JPY 387.7bn Accumulated investment Accumulated return 70

  72. Slide 72: Rajeev Misra

    Head of Strategic Finance for SoftBank Group Rajeev Misra Formerly Senior Managing Director and Partner, Fortress Investment Group Global Head of FICC, UBS Global Head of Credit and Emerging Markets, Deutsche Bank Optimize financial strategy 71

  73. Slide 73: Toward world largest internet group

    Toward world largest internet group 72

  74. Slide 74: The Goose that Laid the Golden Eggs

    Aesop’s Fables The Goose that Laid the Golden Eggs 73

  75. Slide 75: A man and his wife owned a very special goose

    A man and his wife owned a very special goose. Every day the goose would lay a golden egg, which made the couple very rich. One day they imagined that there must be many golden eggs inside the bird and decided to kill the bird. However, there was no golden eggs inside the bird. The goose was dead an

  76. Slide 76: Which is more important?

    Which is more important? 75

  77. Slide 77: The goose premium

    SoftBank Market Cap (Conceptual diagram) The goose premium New Internet group companies Sprint Domestic telecommunications businesses, etc. Yahoo Japan, GungHo, Supercell Alibaba 76 Market cap

  78. Slide 78: Information Revolution - Happiness for everyone

    Information Revolution - Happiness for everyone 77

  79. Slide 79: wa OOftBank

    wa OOftBank

  80. Slide 80: Adoption of IFRSs, Definition of terms, Trademarks

    1. Adoption of IFRSs SoftBank Corp. has adopted the International Financial Reporting Standards (IFRSs) from the three-month period ended June 30, 2013 (transition date: April 1, 2012). The financial data for the three-month period ended June 30, 2012 (“YoY”) and the fiscal year ended March 31, 2013

SoftBank — H1 FY2014 Earnings Presentation on 6ix