Softbank Group Corp. · TSE:9984
Softbank — H1 FY2017 Earnings Presentation
81 slides from Softbank's earnings presentation, Nov 6, 2017
Slide 1: Earnings Results for the 6-month Period ended September 30, 2017
Earnings Results for the 6-month Period ended September 30, 2017 November 6, 2017
Slide 2: Legal Disclaimer
LEGAL DISCLAIMER This presentation (this “Presentation ”) is furnished on a confidential basis to a limited number of sophisticated parties for informational due diligence purposes and is not, and may not be relied on in any manner as, legal, tax, investment, accounting or other advice or as an offe
Slide 3: 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 4: Ceased merger talks
Ceased merger talks Sprint ‘E+ «Mobile:
Slide 5: Most important market
Most important market 3
Slide 6: Communication Infrastructure = Infrastructure for Information Revolution
Communication Infrastructure = Infrastructure for Information Revolution 4
Slide 7: Communication Infrastructure for 1 Trillion IoT Era
Communication Infrastructure for 1 Trillion IoT Era 5
Slide 8: Synergies with Satellite Business
Cellular Backhaul Empowering Communities Without Access Synergies with Satellite Business 6
Slide 9: Synergies with Group Investees
Synergies with Group Investees 7
Slide 10: Maximize profit while maintaining control
Maximize profit while maintaining control 8
Slide 11: Increase Stake in Sprint
Announced Nov. 6, 2017 Increase Stake in Sprint (Note) Subject to market conditions and other factors. Through open market transactions or otherwise. SoftBank Group Corp. does not intend to increase its ownership of Sprint outstanding common stock to 85% or more as a result of these purchases. 9
Slide 12: Consolidated Results
— Consolidated a softBank Results ———EE
Slide 13: Consolidated Results
Consolidated Results FY2016 FY2017 (JPY bn) H1 H1 Change YoY Net sales 4,271.8 4,411.1 +139.3 +3% Adjusted EBITDA 1,333.3 1,390.5 +57.2 +4% EBIT 647.4 874.8 +227.4 +35% Net income 765.5 102.6 -662.9 -87% excl.: sale of Supercell shares,* gain on sale of Alibaba shares, and derivative loss 315.9 449.
Slide 14: Net Sales
Net Sales (JPY bn) 4,411.1 Arm 4,271.8 Up 3% 93.7 1,722.5 1,793.3 Sprint 570.9 569.7 Distribution & others 409.5 425.4 Yahoo Japan Domestic Telco 1,554.6 1,529.0 Decrease in telecom service revenue and product & other sales FY2016 FY2017 *Arm's earnings reflected since Sep. 6, 2016 H1 H1 *Distributi
Slide 15: Adjusted EBITDA
Adjusted EBITDA 1,390.5 1,333.3 (JPY bn) Up 4% 2003 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 (FY) Japanese-GAAP IFRSs * FY2013-14: excluding impact of GungHo & Supercell13
Slide 16: Adjusted EBITDA by segment
Adjusted EBITDA (JPY bn) 1,390.5 Arm Up 4% 1,333.3 15.5 Sprint 516.9 629.0 Cost reduction effort 118.5 108.6 Yahoo Japan 691.3 659.7 Domestic Telco Upfront investment (Home Bundle Discount, customer rewards, etc.) *Arm's earnings reflected since Sep. 6, 2016 FY2016 FY2017 Distribution *Distribution
Slide 17: EBIT
EBIT 874.8 (JPY bn) 647.4 Up 35% 2003 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 (FY) Japanese-GAAP IFRSs * FY2013-14: excluding impact of GungHo & Supercell15
Slide 18: EBIT by segment
EBIT 874.8 SVF (JPY bn) Valuation gain Up 35% 186.2 mainly from NVIDIA Sprint 647.4 Cost reduction effort 104.6 202.2 Gains from spectrum 99.4 license exchange (excl. SVF: Up 6%) 92.7 Yahoo Japan Domestic Telco 465.9 434.0 Upfront investment (Home Bundle Discount, customer rewards, etc.) Distributio
Slide 19: Net Income: Down 87%
Net Income (JPY bn) 765.5 Down 87% 102.6 FY2016 FY2017 H1 H1 Net income: net income attributable to owners of the parent 17
Slide 20: Net Income
Net Income (JPY bn) 904.5 Sale of Supercell shares and gain on sale of Alibaba shares Up 42% 588.6 449.1 315.9 -139.0 -346.5 Derivative loss (in relation to monetization of Alibaba shares) 176.9 102.6 FY2016 FY2017 H1 H1 (Note) after considering tax effect *Net income from discontinued operations Ne
Slide 21: JPY 1.2t Reversal
*Tax effects are not included in the below amounts. *Simulation at time of settlement, assuming that share price is same as that as of Sep. 30, 2017 *Gain on sale of Alibaba shares is estimated based on the carrying amount of JPY 1.2t Alibaba shares on consolidated basis as of Sep. 30, 2017. *Amount
Slide 22: Value of Alibaba Stake Doubled
USD 173 Value of Alibaba Stake USD 141 USD 106 USD 108 Share price USD 77 USD 88 Doubled Jun. Sep. 30, Dec. 31, Mar. 31 Jun. 30, Sep. 30, 2016 2016 2016 2017 2017 2017 (at signing of contract) 20
Slide 23: Value of Alibaba Stake Doubled
USD 173 Value of Alibaba Stake USD 141 JPY 14.5t USD 106 USD 108 Share price USD 77 USD 88 Doubled JPY 6.4t Total market value held by SoftBank Group Jun. Sep. 30, Dec. 31, Mar. 31 Jun. 30, Sep. 30, 2016 2016 2016 2017 2017 2017 (at signing of contract) (Note) Total market value held by SoftBank Gro
Slide 24: Financial Status
Financial Status Domestic Telco Other Businesses (incl. Sprint acquisition cost) etc. Net interest- Net interest- JPY bearing debt JPY 3.3t bearing debt 4.7t Adjusted JPY 1.2t 2.8x Equity value of JPY 21% EBITDA holdings 22.1t *Net interest-bearing debt as of Sep. 30, 2017 (excl. financial liabiliti
Slide 25: Domestic Telco
ea OOftBank Domestic Telco
Slide 26: Domestic Telco EBIT
Domestic Telco EBIT Expansion of customer base Customer rewards Domestic Telco (JPY bn) 465.9 434.0 Down 7% Due to upfront investment * FY2011: JGAAP, FY2012-17: IFRSs After FY2014: Domestic Telecommunications segment Up to FY2013: Mobile Communications segment + Fixed-line ’12 ’13 ’14 ’15 ’16 ’17 (
Slide 27: Domestic Telco Free Cash Flow
Domestic Telco Free Cash Flow Domestic Telco (JPY bn) 326.0 334.5 Up 3% 182.6 2015 2016 2017 (FY) * Free Cash Flow = operating cash flow + investing cash flow H1 H1 H1 * IFRSs, excluding eliminations within SoftBank Group Corp. 25
Slide 28: Strengthen Upfront Investment
Strengthen Upfront Investment Domestic Telco Yahoo! JAPAN Brand Guideline サービスロゴデータ Expansion of Synergy with Customer rewards ●1行ロゴ プロモーション利用の場合は原則このロゴを使用してください。 customer base Yahoo Japan Launched in Sep. 2017 ショッピング Yahoo! Shopping ショッピング Ultra GIGA Monster Half Price Support 10x loyalty points ev
Slide 29: Net Additions (smartphone)
Net Additions (smartphone) EBIT Domestic Telco (k) 810 610 Up 33% 330 ’15 ’16 ’17 (FY) H1 H1 H1 *Net Additions = net additions of cumulative smartphone subscribers (including upgrades) 27
Slide 30: Cumulative Subs (FTTH Service)
Cumulative Subs (FTTH Service) Domestic Telco 4.36m Up 61% 2.70m ’15 ’16 ’17 (FY) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 *SoftBank Hikari includes the data of SoftBank Air 28
Slide 31: J.D. Power: Customer Satisfaction Survey
J.D. Power: Customer Satisfaction Survey Domestic Telco Japan Cloud Service Network Service Large Enterprise Market Groupware Implementation Vendors No.1 No.1 two years in a row Disclaimer: J.D. Power Asia Pacific japan.jdpower.com 2017 Japan Network Service Satisfaction Study. This study measures t
Slide 32: Yahoo! Shopping # of Buyers
Yahoo! Shopping # of Buyers * Total of “SoftBank” and “Y!mobile” users * Via smart login Domestic Telco 3 times in 10x loyalty points campaign, etc. 8 months Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. 2017 30
Slide 33: First FinTech Service in Japan "AI Score Lending"
Joint Venture with Mizuho Bank (From Sep. 25, 2017) Domestic Telco First FinTech Service in Japan “AI Score Lending” *Japan first: First service to offer consumer loans based on "AI Score Lending," which uses AI-based scoring criteria to display interest rates and maximum lending amount intervals. 3
Slide 34: Expansion of New Areas
Expansion of New Areas Domestic Telco FinTech Cloud Security SVF JV with Mizuho Bank JV with Alibaba JV in Japan JV in Japan Develop smartphone-based securities trading market Steady progress in development of Japan market 32
Slide 35: Expansion of New Areas
Expansion of New Areas Domestic Telco + SoftBank Group Investees Generating synergies through pack of joint ventures 33
Slide 36: FY2017 Forecast
FY2017 Forecast Domestic Telco Prioritize upfront investment 1 Drive growth strategy 2 Maintain FCF over JPY 500bn Expect Domestic Telco income to decline (up to -7% YoY) * 3 Focus on future growth *Operating income of Domestic Telecommunications segment (FY2017) 34
Slide 37: Sprint
Sprint »
Slide 38: Net Operating Revenue
Net Operating Revenue (USD bn) 16.3 16.1 Down 1% 2014 ’15 ’16 ’17 (FY) H1 H1 H1 H1 36
Slide 39: Cost Reduction
Cost Reduction (USD bn) 8.1 7.4 USD 750m SG&A reduction Cost of service 2016 2017 (FY) H1 H1 37
Slide 40: Adjusted EBITDA
Adjusted EBITDA 5.6 (USD bn) Doubled in Joined SoftBank Group 2.7 5 years 2012 '13 ’14 ’15 ’16 ’17 (FY) H1 H1 H1 H1 H1 H1 38
Slide 41: Operating Income
Operating Income 1.8 (USD bn) 1.0 Up 80% 2013 ’14 ’15 ’16 ’17 (FY) H1 H1 H1 H1 H1 39
Slide 42: Net Income
Net Income (USD bn) 0.2 Positive for first time in 4 years -0.4 2014 ’15 ’16 ’17 (FY) H1 H1 H1 H1 40
Slide 43: Average Download Speed Change
Average Download Speed Change (YoY) Significantly improved (in major metropolitan areas) *Sprint’s analysis of Ookla's Speedtest Intelligence data from third quarter 2016 to third quarter 2017 for all mobile results 41
Slide 44: FY2017 Forecast
FY2017 Forecast 1 Adjusted EBITDA $10.8-11.2bn 2 Operating income $2.1-2.5bn 3 Cash CAPEX $3.5-4bn 4 Adjusted FCF around breakeven *Cash CAPEX excluding CAPEX associated with purchasing leased devices from indirect channels 42
Slide 45: Yahoo Japan
YAHOO! JAPAN
Slide 46: Advertising Revenue
Advertising Revenue (JPY bn) 74.3 69.4 34.5 37.8 Display ads Up 7 34.8 36.5 Search ads (FY) 2013 ’14 ’15 ’16 ’17 (FY) Q2 Q2 Q2 Q2 Q2 44
Slide 47: Yahoo! Shopping Number of Items
Yahoo! Shopping # of Items ショッピング 290m ＜赤＞ ＜グレー＞ PANTONE 185 PANTONE Cool Gray 11 DIC 156 DIC 541 M91%+Y76% BL80% R255・G0・B51 #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。 Biggest selection 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 in Japan ＜紫＞ ショッピング PANTONE 259 DIC 227 C65%+M100%+K15
Slide 48: Shopping Transaction Value
Shopping Transaction Value ショッピング (JPY bn) 140.7 ＜赤＞ ＜グレー＞ PANTONE 185 PANTONE Cool Gray 11 DIC 156 DIC 541 M91%+Y76% BL80% R255・G0・B51 #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。 Up 39 ショッピング ショッピング 101.1 ●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% R12
Slide 49: Arm
arm
Slide 50: Arm-based Chips Shipped
Arm-based Chips Shipped 9.7bn 7.7bn Up 27% 1990 ’93 ’96 ’99 ’02 ’05 ’08 ’11 ’14 ’17 (H1 of each CY) 48
Slide 51: Revenue
Revenue (JPY bn) 47.0 39.2 (USD 0.35bn) (USD 0.42bn) Up 20% FY2016 FY2017 (Jul. 2016 - Sep. 2016) (Jul. 2017 - Sep. 2017) *USD 1 = JPY 111.38 (average exchange rate of Jul. 2017 - Sep. 2017) 49
Slide 52: Bringing AI to mobile devices
Revealed on Sep. 2, 2017 Latest Chip for Mobile “Kirin 970” Bringing AI Quad Core Cortex-A73@2.4GHz to mobile devices Quad Core Cortex-A53@1.8GHz 12 Core Arm Mali-G72 50
Slide 53: High performance & efficiency
Unveiled details on Aug. 22, 2017 Latest Chip for Servers “Centriq 2400” High performance Industry’s first 10nm server processor Arm v8 compliant (64bit), 48 Cores (24 dual-core processors) & efficiency 51
Slide 54: Powering the world's first self-driving car
Powering the Central driver assistance controller “zFAS” world’s first self-driving car * NVIDIA Tegra K1 New Audi A8 zFAS using NVIDIA Tegra K1 - based on Quad core Arm Cortex-A15 *As a production car (autonomy level 3) 52
Slide 55: Arm-based IoT products
Xperia Hello! Intelligent Communication Tracking tag fire alarm robot Arm-based IoT products Smart respira- Monitoring sensors Stop button tory devices for heart patients (battery-less) 53
Slide 56: FY2017 Forecast
FY2017 Forecast 1 Create new IoT opportunities 2 Gain more share in long-term growth markets 3 Accelerate investment in new technology 54
Slide 57: Alibaba Group
& 2 Alibaba Group 5 WBPPSa
Slide 58: Alibaba Revenue
Total EBIT Revenue JPY 917.2bn USGAAP 570.6bn Up 61% (Source) Created by SoftBank Group Corp. based on publicly available 2011 2012 2013 2014 2015 2016 2017 historical information published by Alibaba Group Holding Limited Jul.-Sep. Jul.-Sep. Jul.-Sep. Jul.-Sep. Jul.-Sep. Jul.-Sep. Jul.-Sep. USD 1.0
Slide 59: Alibaba Income from Operations
Income EBIT from Operations USGAAP JPY 276.0bn 150.5bn Up 83% (Source) Created by SoftBank Group Corp. based on publicly available 2011 2012 2013 2014 2015 2016 2017 historical information published by Alibaba Group Holding Limited Jul.-Sep. Jul.-Sep. Jul.-Sep. Jul.-Sep. Jul.-Sep. Jul.-Sep. Jul.-Sep
Slide 60: Alibaba Non-GAAP Net Income
Non-GAAP EBIT Net Income USGAAP JPY 367.6bn Non-GAAP (Excluding the gains and losses related to share based compensation expenses, amortization of intangible assets, revaluation of investments etc.) 215.5bn Up 71% (Source) Created by SoftBank Group Corp. based on publicly available 2011 2012 2013 20
Slide 61: Alibaba Free Cash Flow
Free Cash Flow USGAAP JPY 374.5bn Non-GAAP 232.0bn Up 61% (Source) Created by SoftBank Group Corp. based on publicly available 2013 2014 2015 2016 2017 historical information published by Alibaba Group Holding Limited Jul.-Sep. Jul.-Sep. Jul.-Sep. Jul.-Sep. Jul.-Sep. USD 1.00 = JPY 111.38, USD 1.00
Slide 62: 60
60
Slide 63: Expanding Group of Innovative Entrepreneurs
Expanding Group of Innovative Entrepreneurs * * The investments led by the SB Investment Advisers (Note) The investment in DiDi is from Delta Fund. However, it is presented herein as an example of an investment led by the Manager. SoFi: Transaction has not closed. Investments presented herein are fo
Slide 64: Fast-growing enterprise collaboration platform
Fast-growing enterprise collaboration platform (USD mil) 200 Revenue 100 0 Year 1 Year 2 Year 3 Year 4 Year 5 *GAAP base (Years since monetization) Such comparables were selected by the Manager for this comparison because the Manager believes they present the most direct comparable in the industry w
Slide 65: Leading neutral geo-location platform
Leading neutral geo-location platform Agriculture Drones Real Estate Registered Media Government BI / Analytics developers Logistics Social Travel 900k (Source) Mapbox’s press release, dated Oct. 10, 2017 63
Slide 66: India's No.1 retailer
Cumulative GMV EC Market Share *As of Dec. of each year 500x 60% 1x 2010 2011 2012 2013 2014 2015 2016 As of Jul.-Sep. quarter, 2017 *Flipkart Group market share India’s No.1 retailer (Source) Flipkart, market share: third party sources, and internal estimates * *Based on EC market share 64
Slide 67: India's No.1 digital payment service
Gross Transaction Value Digital Payment Share 230% Apr. 2015-Mar. 2016 Apr. 2016-Mar. 2017 (FY16) (FY17) *Digital payment share: all transactions done by prepaid payment instruments (From Apr. 2016 to Mar. 2017) India’s No.1 digital payment service * (Source) PayTM *Based on digital payment share 65
Slide 68: Online retailer of licensed sports apparel
Online retailer of licensed sports apparel Strategic partnerships Professional leagues Associations and events College teams (NCAA) 66
Slide 69: Seeking to transform biopharma market through AI
Dedicated unit to develop AI Siloed +10k sources (one of Roivant's companies) Insights for developments of clinical data Seeking to transform biopharma market (>USD 1t / year) through AI 67
Slide 70: Aim to solve multiple infectious diseases
Vir Biotechnology, Inc. Novel scientific discoveries Data science Aim to solve multiple infectious diseases (Influenza, HIV, RSV, etc.) 68
Slide 71: Leading online-only insurtech company in China
Customers Ecosystem Policies sold served partners 525mil 8.2bn 199+ Leading online-only insuretech company in China As of Mar. 31, 2017 69
Slide 72: Aim to offer customized insurance by leveraging Big Data and AI
Ecosystem Customers partners Aim to offer customized insurance by leveraging Big Data and AI 70
Slide 73: Expanding relationships with leading companies
*Circle sizes represent images of investment amounts (incl. plan) through SoftBank Group Corp. and its subsidiaries/affiliates and SVF *The following investments are investments through SoftBank Group Corp. and its subsidiaries/affiliates: Representative Investments Alibaba Group, Grab, Ola, 99, SoF
Slide 74: Accelerate Information Revolution
Accelerate Information Revolution 72
Slide 75: i) om. pk
i) om. 7 pk
Slide 76: New city project near the Red Sea
New city project near the Red Sea JPY 57t investment (from Kingdom of Saudi Arabia, PIF, international investors, etc.) SoftBank to be involved in development Information herein regarding certain potential investment opportunities that may be available for the Fund are subject to known and unknown r
Slide 77: Panel with Crown Prince Mohammed Bin Salman
Panel with Crown Prince Mohammed Bin Salman of the Kingdom of Saudi Arabia (Oct. 24, 2017) 75
Slide 78: MOU with PIF
MOU with PIF (Oct. 25, 2017) 3GW solar Build ecosystem Equity stake * capacity (2018) (renewable energy) Information herein regarding certain potential investment opportunities that may be available for the Fund are subject to known and unknown risks, *Taking significant minority equity stake in SEC
Slide 79: Toward Further Growth
Toward Further Growth 77
Slide 80: SoftBank
SoftBank
Slide 81: Adoption of IFRSs; Trademarks and registered 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. Trademarks and registered trademarks The names of other companies, other logos, product names, ser