Slide 1: Earnings Results for the Nine Months Ended December 31, 2019 - Investor Briefing
Earnings Results for the Nine Months Ended December 31, 2019 Investor Briefing SoftBank Corp. February 7, 2020 1
Slide 2: 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 3: Results for Q1-Q3 FY2019
Results for Q1-Q3 FY2019 FY18: after retrospective ◼ Revenue, operating income and net income increased YoY, and progressing steadily towards full-year forecasts adjustments of ZHD*1 consolidation ◼ Revised full-year revenue and operating income forecasts upward due to growth of smartphone subscribe
Slide 4: Revenue (1/2)
Revenue (1/2) FY18: after retrospective ◼ Revenue increased in all segments. JPY +163.5 bn (+4.7%) YoY adjustments of ZHD consolidation ◼ Consumer segment: JPY +25.9 bn (+1.3%) YoY due to growth in Mobile and Broadband. Revenue from sales of goods and others decreased By Segment Consumer Breakdown [
Slide 5: Revenue (2/2)
Revenue (2/2) FY18: after retrospective ◼ Enterprise segment: JPY +18.8 bn (+18.9%) in Business solution and others adjustments of ZHD consolidation ◼ Yahoo segment: JPY +49.8 bn (+10.4%) in Commerce, including JPY +24.1 bn due to ZOZO consolidation Enterprise Breakdown Yahoo Breakdown [JPY bn] [JPY
Slide 6: Operating Income/Adjusted EBITDA/Segment Income
Operating Income/Adjusted EBITDA/Segment Income FY18: after retrospective ◼ Adjusted EBITDA increased by JPY +176.4 bn (+15.8％) YoY. adjustments of ZHD consolidation Adjusted EBITDA excluding impact from IFRS 16 increased by JPY +66.2 bn ◼ Operating income increased in all segments. JPY +65.6 bn (+9
Slide 7: Segment Income (YoY Comparison)
Segment Income (YoY Comparison) FY18: after retrospective ◼ Enterprise segment income was +18.3% YoY, excluding temporary factors in the previous fiscal year adjustments of ZHD consolidation ◼ Other segment income drastically improved due to PayPay (subsidiary in the previous fiscal year) and gain o
Slide 8: Impact from ZOZO Consolidation
Impact from ZOZO Consolidation ◼ Due to consolidation of ZOZO by ZHD, ZOZO was consolidated from November (segment: Commerce of Yahoo segment) ◼ Operating income increased JPY 4.3 bn (after amortization of PPA*1) from ZOZO consolidation [JPY bn] Effect on Consolidated Balance Sheets Effect on Consol
Slide 9: Operating Income (YoY Comparison)
Operating Income (YoY Comparison) FY18: after retrospective ◼ Revenue increased in all segments. After deduction of Cost of goods sold and Telecommunication adjustments of ZHD consolidation network charges, gross profit increased by JPY +79.7 bn YoY (a) ◼ Expenses increased by JPY 47.8 bn YoY (b) du
Slide 10: Cumulative Subscribers (Main Subscribers/Smartphones)
Cumulative Subscribers (Main Subscribers/Smartphones) ◼ Cumulative main subscribers reached 35.93 mil (+1.70 mil YoY) ◼ Cumulative smartphones reached 23.48 mil (+2.02 mil YoY), steady growth in all 3 brands Cumulative Subscribers*1 Smartphone Subscribers YoY [Mil] [Mil] 35.56 35.93 +1.70 34.22 Main
Slide 11: Churn Rate (Main Subscribers/Smartphones)
Churn Rate (Main Subscribers/Smartphones) ◼ Churn rate improved significantly due to lower customer liquidity following the Amendment of Telecommunications Business Act in October 2019 ◼ Churn rate for smartphones reached historical low 0.02 0.02 0.01 YoY 0.01 1.10% 1.03% 0.98% 0.01 -0.16% 0.86% Mai
Slide 12: ARPU (Main Subscribers)
ARPU (Main Subscribers) ◼ ARPU before discount decreased due to the introduction of plans that separate handset payment and service fees, as well as a rise in composition ratio of Y!mobile and LINE MOBILE subscribers (a) ◼ Total ARPU rose by JPY 60 YoY in Q3 due to a decrease in Monthly Discounts af
Slide 13: Broadband Service
Broadband Service ◼ SoftBank Hikari cumulative subscribers were 6.25 mil as of Q3, steadily increased 0.53 mil YoY ◼ Home Bundle Discount Hikari Set applications to mobile subscribers increased to 9.97 mil Cumulative Subscribers Home Bundle Discount Hikari Set (Number of Connected Lines) YoY Cumulat
Slide 14: Net Income (YoY Comparison)
FY18: after retrospective Net Income (YoY Comparison) adjustments of ZHD consolidation ◼ Financing income/costs: Improvement due to valuation gain of financial instruments and decrease in interest (a) ◼ Shares of profit/losses of associates accounted for using the equity method: Loss increased from
Slide 15: Revisions to FY2019 Full-year Forecast
Revisions to FY2019 Full-year Forecast ◼ Revised full-year revenue and operating income forecasts upward due to growth of smartphone subscribers and Business solution and others ◼ No revision to net income due to recording of JPY 19.5 bn in income tax related to business integration between ZHD and
Slide 16: CAPEX/Adjusted Free Cash Flow
FY18: after retrospective CAPEX/Adjusted Free Cash Flow adjustments of ZHD consolidation ◼ CAPEX was JPY 281.9 bn. CAPEX excluding ZHD was JPY 216.9 bn (FY target JPY 380.0 bn) ◼ Adjusted free cash flow was JPY 145.4 bn. Adjusted free cash flow excluding ZHD and IFRS 16 impact was JPY 475.2 bn. Prog
Slide 17: Interest-bearing Debt/Net Interest-bearing Debt and Net Leverage Ratio
Interest-bearing Debt/Net Interest-bearing Debt FY18: after retrospective adjustments of ZHD consolidation and Net Leverage Ratio ◼ Net interest-bearing debt increased QoQ due to tender offer by ZHD for ZOZO shares and payment of dividends and income taxes ◼ Net leverage ratio temporarily increased
Slide 18: Major Financing Activities
Major Financing Activities ◼ Promoting the diversification of financing methods with the aim of stabilizing the financial base ◼ Start preparations for issuance of bonds FY19Q3 Time Category Events Purpose, effect, etc. balance period JPY Syndicated loan arrangement Financing to acquire ZHD shares O
Slide 19: Business Integration Between ZHD and LINE
Business Integration Between ZHD and LINE ◼ After the business integration is completed, the JV (consolidated by SoftBank) between NAVER and SoftBank will own 65.3% of ZHD Post-Integration Structure ・SoftBank will have control of the majority of the board of directors (three out of five nominees) 50
Slide 20: Proposed Transaction Structure
Proposed Transaction Structure As of the commencement Tender offer for LINE shares/ Transfer of Integration of of transaction 100% subsidization ZHD shares ZHD and LINE business Joint tender offer and squeeze-out SB NAVER SB NAVER SB NAVER SB NAVER 13.7% 86.3% 100% 100% 50% 50% 50% 50% JV Shiodome-Z
Slide 21: Timeline (planned)
Timeline (planned) Nov. 18, Dec. 23, Mar. 17, May – Jun. Sep. Oct. 2020 2019 2019 2020 2020 2020 (Target) ZHD’s Tender offer for Tender offer for Extraordinary LINE shares by ZHD shares by General Meeting of SoftBank & NAVER LINE Signing of Signing of Shareholders Memorandum of Definitive Closing Un
Slide 22: SoftBank Growth Strategy
SoftBank Growth Strategy New Businesses Beyond Carrier AI / Technologies Cutting-edge business models Yahoo Japan Telecom Business Smartphone subscriber growth Broadband subscriber growth New infrastructure 22 22
Slide 23: Appendix
Appendix
Slide 24: Consolidated Statements of Income
Consolidated Statements of Income [Reference] After ZHD Consolidation Disclosed [JPY bn] Variance Reasons for Variance FY18 FY19 FY18 Q1-Q3 Q1-Q3 Q1-Q3 Revenue 3,454.5 3,618.0 +163.5 2,776.7 Cost of sales -1,804.4 -1,857.3 -52.8 -1,521.4 Gross profit 1,650.0 1,760.7 +110.6 1,255.3 Selling, general a
Slide 25: Consolidated Statements of Financial Position (Assets)
Consolidated Statements of Financial Position (Assets) [Reference] After ZHD Consolidation Disclosed [JPY bn] Variance Reasons for Variance As of As of As of Mar. 31, 2019 Dec. 31, 2019 Mar. 31, 2019 Total assets 8,036.3 9,965.9 +1,929.5 5,775.0 Current assets 2,965.7 3,610.2 +644.5 1,756.3 Cash and
Slide 26: Consolidated Statements of Financial Position (Liabilities)
Consolidated Statements of Financial Position (Liabilities) [Reference] After ZHD Consolidation Disclosed [JPY bn] Variance Reasons for Variance As of As of As of Mar. 31, 2019 Dec. 31, 2019 Mar. 31, 2019 Total liabilities 6,013.8 8,281.5 +2,267.8 4,510.6 Current liabilities 3,317.0 4,576.9 +1,259.9
Slide 27: Consolidated Statements of Financial Position (Equity)
Consolidated Statements of Financial Position (Equity) [Reference] After ZHD Consolidation Disclosed [JPY bn] Variance Reasons for Variance As of As of As of Mar. 31, 2019 Dec. 31, 2019 Mar. 31, 2019 Total equity 2,022.6 1,684.3 -338.2 1,264.5 Equity attributable to owners of the Company 1,498.2 967
Slide 28: Consolidated Statements of Cash Flows
Consolidated Statements of Cash Flows [Reference] After ZHD Consolidation Disclosed [JPY bn] Reasons for Variance FY18 FY19 FY18 Q1-Q3 Q1-Q3 Q1-Q3 Cash flows from operating activities 727.6 793.1 651.2 Net income 453.2 469.2 392.3 Depreciation 375.8 497.1 +105.6 due to adoption of IFRS 16 337.2 Incr
Slide 29: Subsidiaries (1/2)
Subsidiaries (1/2) ◼ 269 group companies as of Dec. 2019 (of which, 206 subsidiaries and 63 affiliate*1 companies) Ratio of Voting Segment Company Name Business Description Blue: listed company Rights Held Wireless City Planning Inc. 32.2% Telecommunication services (Economic interests: 99.5%) LINE
Slide 30: Subsidiaries (2/2), Affiliates
Subsidiaries (2/2), Affiliates Ratio of Voting Segment Company Name Business Description Blue: listed company Rights Held HAPSMobile Inc. 92.9% R&D and manufacturing of network equipment for HAPS business SB Payment Service Corp. 100.0% Payment processing SB Cloud Corp. 60.0% Sales of public cloud s
Slide 31: SoftBank
SoftBank