Softbank Group Corp. · TSE:9984
Softbank — Q2 FY2023 Earnings Presentation
72 slides from Softbank's earnings presentation, Nov 9, 2023
Slide 1: Earnings Results for the 6-month Period ended September 30, 2023
Earnings Results for the 6-month Period ended September 30, 2023 November 9, 2023
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: September 14, 2023 Largest IPO in 2023
September 14, 2023 Largest IPO in 2023 3 3
Slide 4: Arm IPO on Nasdaq
Sep 14 Listed on the Nasdaq Global Select Market $5,123M SBG’s proceeds from the disposal 1ADS Price to the public per ADS $51.00 - Upper limit of the preliminary terms ($47.00 - $51.00) $52B Market cap upon listing 90.0% Percentage of Arm shares held by SBG post-IPO Market cap upon listing is calcu
Slide 5: Investment Return on Arm
Investment Return on Arm ¥8.5T Borrowings Equity MOIC ¥3.3T ¥7.5T Equity value 3.2X ¥2.3T The amounts of investment and return are calculated using forex rates on each transaction day or valuation date. Investment Return Equity MOIC: Calculated based on the investment and return on the value of
Slide 6: Investment Track Record
Investment Track Record Sprint/ Alibaba Arm T-Mobile・Deutsche Telekom Arm's success (¥ T) 9.8 is on par with 8.5 our past large investments Borrowings 1.0 MOIC 1,339x MOIC 7.2x MOIC 3.2x +¥9.8T +¥2.5T +¥5.2T Further growth Equity value 4.6 expected The amounts of investment and return are calculat
Slide 7: Top 15 Global IPO Market Cap in Past 10 Years
Top 15 Global IPO Market Cap in Past 10 Years Saudi Aramco $1,707B Alibaba Alibaba $168B Life Insurance Corp of India Uber Uber $75B Porsche Rivian Automotive DiDi DiDi SBKK $67B $64B SBG involved in 6 of the top 15 IPOs SBKK Kuaishou Technology Coupang Coupang LG Energy Solution $60B as the primary
Slide 8: Consolidated Results
Consolidated Results Some figures in this presentation are rounded and may not add up to the figures presented as the total. 8
Slide 9: Consolidated Results
Consolidated Results (¥ B) FY2022 FY2023 H1 H1 Change Net sales 3,182.5 3,227.1 +44.6 Loss on Investments -849.6 -963.6 -114.0 Income before income tax 292.6 -907.4 -1,200.1 Net income -129.1 -1,408.7 -1,279.6 Net Income: Net income attributable to owners of the parent 9
Slide 10: Transaction of Arm Shares
Transaction of Arm Shares 1. Accounting treatment of the acquisition of shares from SVF1 In Aug 2023, 25% equivalent shares were acquired from SVF1. Realized gain recorded at SVF was eliminated in consolidation as this was an intra-group transaction of subsidiary’s shares. Realized gain attrib
Slide 11: Transaction of Arm Shares: Share Disposal in IPO
Transaction of Arm Shares 2. Accounting treatment of the share disposal in IPO Arm continues to be SBG’s consolidated subsidiary post-IPO as SBG holds 90% of Arm shares. Gain equivalent on the disposal is not recorded in P/L but recorded in equity section of B/S. Consolidated P/L Consolidated B/
Slide 12: Gain/Loss on Investments
Gain/Loss on Investments (¥ B) Investment Business of Holding Companies SVF Mainly gain related to Others settlement of Alibaba prepaid forward contracts Consolidated 3,524.7 33.3 Reduction in -413.5 losses at SVF -583.3 -849.6 -4,353.5 -963.6 -20.7 FY2022 FY2023 H1 H1 SVF: SoftBank Vision Funds 12
Slide 13: Income before Income Tax
Income before Income Tax Third-party interests in SVF （The same impact on net income） ¥1,018.7B ¥226.3B Positive impact Negative impact (¥ B) 292.6 Change in third-party interests in SVF led to the ¥1.2T deterioration -907.4 FY2022 FY2023 H1 H1 Net Income: Net income attributable to owners of the pa
Slide 14: Key Indicators
Key Indicators Some figures in this presentation are rounded and may not add up to the figures presented as the total. SBG stand-alone financial figures in this section are calculated by excluding those of self-financing entities from the consolidated figures. Major self- financing entities include
Slide 15: Changes in Key Indicators (FY2023Q2)
Changes in Key Indicators (FY2023Q2) Jun 30, 2023 Sep 30, 2023 NAV (Net Asset Value) ¥15.5T ¥16.4T LTV (Loan-to-Value) 8.0% 10.6% Cash position ¥5.8T ¥5.1T For details of NAV and LTV, see Appendix “Definition and Calculation Method of SBG’s NAV and LTV (as of Jun 30, 2023)” and “Definition and Calcu
Slide 16: Change in NAV
Change in NAV (¥ T) Share price Others Forex - 0.2 ＋0.6 ＋0.5 Up ¥0.9T mainly due to NAV 15.5 16.4 forex impact and higher share prices of assets Jun 30, 2023 Sep 30, 2023 For details of NAV, see Appendix “Definition and Calculation Method of SBG’s NAV and LTV (as of Jun 30, 2023)” and “Definition an
Slide 17: NAV per Share and Share Price
NAV per Share and Share Price (¥) Share price NAV per share 10,616 11,196 -43% -36% 6,773 6,335 6,238 Jun 30, 2023 Sep 30, 2023 Nov 8, 2023 For details of NAV, see Appendix “Definition and Calculation Method of SBG’s NAV and LTV (as of Jun 30, 2023)” and “Definition and Calculation Method of SBG’s N
Slide 18: Equity Value of Holdings
Equity Value of Holdings Net of asset-backed finance (¥ T) Equity value 21.7 increased 4.5 19.7 18.4 driven by Arm 3.0 16.9 16.9 0.01 Composition (as of Sep 30, 2023) 15.9 0.02 2.7 2.4 2.0 2.2 0.7 2.4 Alibaba 0.03% 2.3 2.4 3.3 3.4 3.3 3.0 SoftBank Corp. 15% 2.8 2.8 3.9 SVF1 18% 4.5 4.2 4.0 3.7 3.5 0
Slide 19: Equity Value of Holdings
Equity Value of Holdings Net of asset-backed finance 0.03% 15% 15% 28% Diversified portfolio 11% 59% 18% Addressing geopolitical risks 9% 17% As of Sep 30, As of Sep 30, 2020 2023 21% 20% Alibaba 59% 0.03% 21% SoftBank Corp. 6% 15% 5% 6% SVF1 9% 18% 8% 16% 5% 9% SVF2 3% 21% 7% 3% 3% 1% LatAm Funds 1
Slide 20: NAV (Net Asset Value)
NAV (Net Asset Value) ¥16.4T $109.7B (Sep 30, 2023) Back to upward trend 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 (FY) As of the end of each quarter For details of NAV, see Appendix “Definition and Calculation Method of SBG’s NAV and LTV (as of Sep 30, 2023)” Information on N
Slide 21: LTV (Net Debt / Equity Value of Holdings)
LTV (Net Debt / Equity Value of Holdings) Net of asset-backed finance 40% 35％ 30% 25％ 20% 21.6% 18.2% Remain at 20.4% 18.7% 15.0% 14.5% 11.0% 10.6% 10% 8.0% low level 0% Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY2021 FY2022 FY2023 As of the end of each quarter For details of LTV, see Appendix "Definition and Cal
Slide 22: Cash Position
Cash Position (¥ T) 6.0 5.8 5.1 5.1 5.0 4.6 4.3 4.0 3.8 3.0 2.8 2.9 Maintain 2.0 2.1 high level 1.0 0.0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY2021 FY2022 FY2023 As of the end of each quarter Cash position: Cash and cash equivalents + short term investments recorded as current assets + investments in governme
Slide 23: Impact of Forex (FY2023H1)
Impact of Forex (FY2023H1) Weaker JPY increased NAV and equity On NAV On accounting Equity +¥1.8T +¥1.9T Consolidated net income -¥0.6T For details of NAV, see Appendix “Definition and Calculation Method of SBG’s NAV and LTV (as of Sep 30, 2023)” 23
Slide 24: Arm
Arm Some figures in this presentation are rounded and may not add up to the figures presented as the total. 24
Slide 25: Arm-based Chips Shipped (cumulative)
Arm-based Chips Shipped (cumulative) (Billion) Cumulative until Jun 2023 >270 billion Shipped in Jan - Jun 2023 13.9 billion 1990 2023 （Calendar year） (Source) Arm The number of Arm-based chips shipped on this page is the actual shipments of royalty units (chips incorporating Arm technology) by Arm
Slide 26: Revenue Opportunity in Growing Market
Revenue Opportunity in Growing Market Market Share TAM CAGR (2020 to 2022) 2025E TAM (2022 to 2025E) MOBILE >99% >99% $36B 6% CLOUD COMPUTE 7% 10% $28B 17% AUTOMOTIVE 33% 41% $29B 16% IoT & EMBEDDED 58% 65% $50B 7% TOTAL OPPORTUNITY 42% 42% 49% 49% $247B 7% (Source) Arm F-1 Market share: Based on Ar
Slide 27: Arm's Target Markets
Arm’s Target Markets Client Automotive Mobile devices Advanced driver-assistance systems Note PCs, tablets Autonomous driving DTVs, wearables, VR headsets Digital cockpit etc. etc. Infrastructure IoT Cloud compute / Servers Manufacturing equipment ５G network equipment City infrastructure and buildin
Slide 28: Arm's Target Markets
Arm’s Target Markets Client Automotive Infrastructure AI IoT 28
Slide 29: Progress in Strategy with Industry Leaders
Progress in Strategy with Industry Leaders Google’s latest smartphone Pixel 8 announced based on Arm’s latest generation of CPUs (Armv9) NVIDIA announced second generation of Arm-based GH200 Grace Hopper Superchip Renesas Electronics announced adoption of Arm technology for next generation of chips
Slide 30: Quarterly Revenue (US-GAAP)
Quarterly Revenue (US-GAAP) ($ M) License and other revenue Royalty revenue 806 692 Record revenue 675 630 388 for first quarter 258 188 275 as a listed company Multiple 434 442 high-value licenses 400 418 Q1 Q2 Q1 Q2 FY2022 FY2023 (Source) Arm For details, see Arm Investor Relations website (https:
Slide 31: Non-GAAP Operating Profit (US-GAAP)
Non-GAAP Operating Profit (US-GAAP) ($ M) 381 92% increase 297 272 yoy Growing 198 strongly Q1 Q2 Q1 Q2 (Source) Arm See the end of Arm’s FYE24-Q2 Shareholder Letter for a reconciliation of Non-GAAP FY2022 FY2023 Operating Income to the most directly comparable GAAP metric. For details, see Arm Inve
Slide 32: Annual Revenue (US-GAAP)
Annual Revenue (US-GAAP) ($ M) License and other revenue 2,960 - 3,080 Royalty revenue 2,703 2,679 2,027 1,141 1,004 Strong revenue amid 714 weak semi market 663 1,562 1,675 H1 actual 1,313 1,481 818 2020 2021 2022 2023 (FY) (Source) Arm Guidance For details, see Arm Investor Relations website (http
Slide 33: Guidance (US-GAAP)
Guidance （US-GAAP） • Arm has good visibility of its licensing pipeline although timing, deal size, etc. can change • Analysts forecast that the semiconductor industry will continue to recover although trajectory is unclear FY2023 FY2023 Q3 (E) (E) Revenue $720M - $800M $2,960M - $3,080M Non-GAAP ope
Slide 34: SoftBank Vision Funds
SoftBank Vision Funds SoftBank Vision Funds: SoftBank Vision Funds Segment. Includes SVF1, SVF2, and LatAm Funds. Some figures in this presentation are rounded and may not add up to the figures presented as the total. 34
Slide 35: SVF: Gain/Loss on Investments (FY2023Q2)
SVF: Gain/Loss on Investments (FY2023Q2) USD basis (SVF1 + SVF2 + LatAm Funds) Combined SVF1 SVF2 LatAm Funds +$232M +$2,413M -$2,084M -$97M The information contained herein is provided solely for illustrative purposes and individual investors’ results may vary. There is no guarantee that historical
Slide 36: SVF: Gain/Loss on Investments (quarterly)
SVF: Gain/Loss on Investments (quarterly) USD basis (SVF1 + SVF2 + LatAm Funds) 34,467 ($ M) Profit for the last 2 consecutive quarters 13,567 10,910 Incl. investment gains and losses on SBG 4,607 5,554 FY23Q2 subsidiaries (mainly Arm) 232 2,869 3,549 3,768 958 785 2,285 2,969 FY21 FY23 eliminated i
Slide 37: SVF: Gain/Loss on Investments (cumulative)
SVF: Gain/Loss on Investments (cumulative) USD basis (SVF1 + SVF2 + LatAm Funds) 66,374 ($ M) 60,821 Cumulative 56,808 55,867 investment losses continue to improve The information contained herein is provided solely for 31,245 illustrative purposes on an SBG basis and individual investors' results m
Slide 38: SVF1: Cumulative Investment Return
SVF1: Cumulative Investment Return (as of Sep 30, 2023) ($ B) 104.4 89.6 Exited 62.1 34.6 Public companies (investments 29.5 before exit) 19.2 Private companies (investments 25.5 23.1 before exit) Investment cost Cumulative investment return The information contained herein is provided solely for il
Slide 39: SVF2: Cumulative Investment Return
SVF2: Cumulative Investment Return (as of Sep 30, 2023) ($ B) 52.2 Exited 2.5 Public companies 8.8 (investments before exit) 31.5 3.0 Private companies 3.6 (investments 40.9 before exit) 24.9 Investment cost Cumulative investment return The information contained herein is provided solely for illustr
Slide 40: Public Listings and Late-stage Pipeline
Public Listings and Late-stage Pipeline Public listings (Since inception) Robust late-stage portfolio 50 listings $29B+ Total FV of late-stage portfolio Select portfolio companies As of Sep 30, 2023. Source: SBGA/SBIA Analysis. The number of public listing includes the number of IPOs and SPAC merger
Slide 41: Portfolio Companies Driving the AI Revolution
Portfolio Companies Driving the AI Revolution Best-in-class adoption of AI, across multiple use cases Uses generative AI techniques to build Deploys AI algorithms to power the delivery products and services enabling intuitive food of personalized content and grocery ordering experiences in India Sha
Slide 42: AI Investment Strategy
AI Investment Strategy 42
Slide 43: Invested Amounts (SVF1 + SVF2 + LatAm Funds + SBG/Others)
Invested Amounts (SVF1 + SVF2 + LatAm Funds + SBG/Others) ($ B) 2.5 SBG/ Others 0.2 Resumed investment 1.8 Continue to prioritize SVF1+ 0.9 1.5 high-quality SVF2+ LatAm 2.3 opportunities Funds 1.1 0.5 0.5 0.5 0.1 0.1 0.9 0.2 0.4 0.4 0.4 0.3 Q1 Q2 Q3 Q4 Q1 Q2 Invested amounts by SBG/Others: Investmen
Slide 44: AI Investment Strategy
AI Investment Strategy Investment by SBG SBG’s • Longer-term value creation investment • Strategic investment ＝ strategy • Flexible ownership • Thematic, concentrated investment Investment by SVF AI • Up to 14-year fund life investment • Financial investment strategy • Minority ownership • Diversifi
Slide 45: Stack AV
Stack AV Aims to optimize supply chains, delivery route, and energy efficiency by leveraging proprietary self-driving technology • Founded in early 2023 backed by SBG • Developing AI-powered technology to revolutionize long-standing challenges in the trucking industry ✓ Driver shortage ✓ Efficiency
Slide 46: Balyo
Balyo Convert pallet handling to autonomy with driverless forklifts • Founded in 2005, listed since 2017 EURONEXT • Completed acquisition of 71.4% of shares through takeover bid in October 2023 • 1200+ robots in 300+ sites deployed in 30 countries • Simplify system commissioning & update with a code
Slide 47: Mapbox
Mapbox Provides custom navigation and map application for flexible use • Founded in 2013 • Mapbox’s AI-powered location technology is used by 700M+ monthly active users • Adopted by vehicle navigation systems in Toyota, GM, BMW, and Rivian • Maximizes delivery efficiency by optimizing delivery route
Slide 48: Video
Mapbox Video 48
Slide 49: 49
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Slide 50: Singularity will arrive within 10 years
In the 4-billion-year history of life on Earth, Singularity will arrive within 10 years We are currently in the midst of a 10-year crossover Masayoshi Son keynote presentation at SoftBank World 2023 50 50
Slide 51: Present
Present GPT-4 (Passed USMLE) Within 10 yrs. Within 20 yrs 10x sumtotal —_10,000x sum total of allhuman- ° of‘all human ‘ intelligence intelligence Achieved passing score in USMLE (United States Medical Licensing Examination) practice materials. Exams were evaluated through GPT-4 scores (5-shot) (Sou
Slide 52: AGI will revolutionize each and every industry
Public Data Learning Inference All AGI Industries Private Data AGI will revolutionize each and every industry at their core (Real-time Learning and Inference) 52 52
Slide 53: AGI will revolutionize all industries
Service Accident-Free Autonomous Driving Genetic Analysis for Personalized Medicine More human-like customer service Data-Driven Supply Matching Optimal investment execution Just-in-time by the second An automated, efficient world AGI will revolutionize all industries 53 53
Slide 54: I am determined to make SoftBank the most AI-empowered company
I am determined to make SoftBank the most AGIに取り組んだ企業は AI-empowered 今から１０年後、２０年後に company 人類のリード役 in the world となる SoftBank Masayoshi Son keynote World presentation 2023 基調講演 at SoftBank World 2023 54 54
Slide 55: Financial Strategy
Financial Strategy 55
Slide 56: FY2023 Financial Strategy
FY2023 Financial Strategy Financial management Adhering to adaptable to both financial policy Defense and Offense 56
Slide 57: Adhering to Financial Policy
Adhering to Financial Policy Maintain LTV below 25% in normal times 1 (upper threshold of 35% even in times of emergency) 2 Maintain at least 2-year worth of bond redemptions in cash Secure recurring distributions and dividend income from 3 SVF and other subsidiaries 57
Slide 58: Respond to Both Defense and Offense
Respond to Both Defense and Offense Invest in the Defense against Information further downside Revolution, while maintaining financial stability Maintain LTV below 25% in normal times (LTV = 10.6% as of Sep 30, 2023) Maintain at least 2-year worth of bond redemptions in cash (Cash position = ¥5.1T a
Slide 59: Capital Allocation
Capital Allocation New Shareholders investments return* Endeavor to strike a Financial policy balance （Financial stability） * The level of NAV discount is also considered 59
Slide 60: Summary
Summary Arm IPO completed. Further growth 1 expected 2 NAV increased from ¥15.5T to ¥16.4T Resumed investment. Continue to prioritize 3 high-quality opportunities SVF looks to increase mid- to long-term 4 value 60
Slide 61: Information Revolution - Happiness for Everyone
“Information Revolution －Happiness for Everyone” 61 61
Slide 62: SoftBank
SoftBank
Slide 63: Appendix
Appendix Some figures in this presentation are rounded and may not add up to the figures presented as the total. 63
Slide 64: Monetization and Capital Allocation (FY2023Q1-Q2)
Monetization and Capital Allocation (FY2023Q1-Q2) (¥ T) Sale of Arm shares -0.6 5.1 0.7 5.1 1st consideration for Arm shares acquired SVF’s investment and SBG’s strategic -0.5 investment Undrawn commitment line 0.6 0.7 -0.2 Debt repayment 0.7 Undrawn -0.4 commitment line Monetization 1.5 -1.2 4.5 4.
Slide 65: Equity Value of Holdings: Diversified Portfolio
Equity Value of Holdings: Diversified Portfolio Net of asset-backed finance 0.03% 5% 15% SoftBank Corp. Alibaba 23% 15% 8% T-Mobile/ 10% Deutsche Telekom 10% 5% 24% Arm Diversified 12% 18% portfolio Addressing SVF1+SVF2+ 43% 45% 44% LatAm Funds geopolitical risks 435 439 436 investments investments
Slide 66: Equity Value of Holdings: Diversified Portfolio
Equity Value of Holdings: Diversified Portfolio 15% 9% China 31% 17% Japan 18% 12% APAC Greater geographical 11% （excluding China 12% and Japan） 9% 20% 27% 35% EMEA diversification 4% 5% 5% Latin America 25% 24% 22% North America Mar 31 Mar 31 Sep 30 2022 2023 2023 Classification of regions based on
Slide 67: SVF: Value Changes in Portfolio (cumulative)
SVF: Value Changes c in Portfolio (cumulative) USD basis (SVF1 + SVF2 + LatAm Funds) Mar 31, 2023 Sep 30, 2023 No change No change 26 co Gain 15 co Gain (6%) +$46.3B (3%) +$52.7B 101 co 107 co (21%) (23%) 346 co 353 co (73%) (74%) Loss Loss -$54.8B -$60.0B -$8.5B (473 co) -$7.3B (475 co) The informa
Slide 68: SVF: Gain/Loss on Investments
SVF: Gain/Loss on Investments USD basis (SVF1 + SVF2 + LatAm Funds) FY2023Q1 (Total +$975M) FY2023Q2 (Total +$232M) Markup +$5,385M (150 companies) +$6,180M (89 companies) +256 +238 +1,731 +2,649 +511 +557 +404 +242 +989 +3,990 (9 co) (12 co) (44 co) (32 co) (53 co) (16 co) (26 co) (15 co) (20 co) (
Slide 69: SVF1 Public Portfolio Companies (as of Sep 30, 2023)
SVF1 Public Portfolio Companies (as of Sep 30, 2023) (a) (b) (c) = (b) - (a) (d) = (b) / (a) ($ M) Company Investment cost *2 Gross return *3 Gross gain (loss) Gross MOIC *4 to SVF1 to SVF1 to SVF1 Coupang 2,729 10,628 7,899 3.9x Doordash 680 7,539 6,859 11.1x Fully Exited NVIDIA 2,878 5,813 2,936 2
Slide 70: SVF2 Public Portfolio Companies (as of Sep 30, 2023)
SVF2 Public Portfolio Companies (as of Sep 30, 2023) (a) (b) (c) = (b) - (a) (d) = (b) / (a) Investment cost *2 Gross return *3 Gross gain (loss) *4 ($ M) Company Gross MOIC to SVF2 to SVF2 to SVF2 Fully Exited Beike 1,350 2,497 1,147 1.8x Symbotic 200 669 469 3.3x Neumora Therapeutics 60 108 48 1.8
Slide 71: Definition and Calculation Method of SBG's NAV and LTV (as of Sep 30, 2023)
Definition and Calculation Method of SBG’s NAV and LTV (as of Sep 30, 2023) 1. NAV (Net Asset Value) • NAV = Equity value of holdings - Net debt 2. Equity value of holdings (after adjustment for asset-backed financing) • Alibaba: the number of Alibaba ADSs equivalent to the number of shares held by
Slide 72: Definition and Calculation Method of SBG's NAV and LTV (as of Jun 30, 2023)
Definition and Calculation Method of SBG’s NAV and LTV (as of Jun 30, 2023) 1. NAV (Net Asset Value) • NAV = Equity value of holdings - Net debt 2. Equity value of holdings (after adjustment for asset-backed financing) • Alibaba: the number of Alibaba ADSs equivalent to the number of shares held by