Softbank Group Corp. · TSE:9984
Softbank — Q1 FY2024 Earnings Presentation
47 slides from Softbank's earnings presentation, Aug 7, 2024
Slide 1: Earnings Results for the Three-month Period Ended June 30, 2024
Ver.1. Earnings Results for the Three-month Period Ended June 30, 2024 Investor Briefing August 7, 2024 SoftBank Group Corp.
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: Exchange rates and abbreviations
Exchange rates per JPY used for translation FY2023 FY2024 Average during quarter Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 1 USD 138.11 145.44 147.00 147.87 156.53 EOQ Jun 30 Sep 30 Dec 31 Mar 31 Jun 30 Sep 30 Dec 31 Mar 31 1 USD 151.41 161.07 Abbreviations Abbreviations used in Finance section of this presentation a
Slide 4: Finance
Finance SBG stand-alone financial figures are calculated by excluding those of self- financing entities from the consolidated figures, unless otherwise stated. Major self financing entities include SBKK (including its subsidiaries such as LY Corporation and PayPay), Arm, SVF1, SVF2, LatAm Funds, etc
Slide 5: Financial soundness stays intact even during market fluctuations
Impact of Recent Market Environments Financial soundness stays intact even during market fluctuations ◼ LTV level with a sufficient buffer ※ Pro forma ◼ Completed bond refinancing for FY2024 (as of Jun 30, 2024) Applying share prices and FX rate as of Aug 6, 2024 ◼ Maintain ample cash position NAV L
Slide 6: End of June – Our Perspective on Market Fluctuations
End of June – Our Perspective on Market Fluctuations Low LTV and ample cash position allows us to effectively absorb sudden market fluctuations Equity value of Net interest Cash position holdings -bearing debt (SBG stand-alone) (SBG stand-alone) ¥38.3T Net of asset backed finance LTV 7.8% Maintain 5
Slide 7: Pro forma: Short-term Share Price/Foreign Exchange Fluctuations
Pro forma (Jun end)- Our Perspective on Market Fluctuations: Short-term Share Price/ Foreign Exchange Fluctuations Managing LTV level with a sufficient buffer despite sudden market shifts Equity value of Net interest Cash position Pro forma holdings -bearing debt (SBG stand-alone) (as of Jun 30, 202
Slide 8: Our Perspective on Market Fluctuations
Our Perspective on Market Fluctuations Solid financial position unaffected by short-term market fluctuations Share price / Foreign exchange ◼ LTV ratio with sufficient buffer: • Significant buffer in LTV even during market turbulence • ¥6T of the listed shares* held is in telecommunication Short-ter
Slide 9: Difference from the 2020 COVID-19 Shock
Difference from the 2020 COVID-19 Shock CDS fluctuation is limited compared to COVID-19 shock. We now possess a solid financial foundation Mar 2020 Jun 2024 Historical SBG share price/CDS*1 • LTV 14.2% • LTV 7.8% • Cash position ¥1.8T*2 • Cash position ¥4.6T*3 (¥) 5-year CDS (bps) Concerns in 2020 N
Slide 10: Financials as an Investment Company
Financials as an Investment Company Adapt to all market changes (We have full control over the pace and scale of investments) Cash position ¥4.6T + monetization Source Normal times Times of emergency Capital Monetize Control allocation Growth investment Growth Shareholders Financial Bond Shareholder
Slide 11: FY2024Q1 Financial Summary
FY2024Q1 Financial Summary Achieved highest NAV and lowest LTV ever. Completed bond refinancing Continued strategic investments in AI NAV ¥35.3T (+¥7.5T QoQ) LTV 7.8％ (-0.6pt QoQ) NAV・LTV Net debt ¥3.0T (+¥0.4T QoQ) *1 Cash position ¥4.6T (-¥0.1T QoQ) Executed bond refinancing - Domestic bonds: rede
Slide 12: Historical NAV
Historical NAV Surge in Arm’s share price has been the main driver of NAV growth NAV ¥35.3T (as of Jun 30, 2024) NAV Pro forma (as of Jun 30, 2024) Applying share prices and FX rate as of Aug 6, 2024 ¥24.9T 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 (FY) （Note）As of each q
Slide 13: Historical NAV and Market Cap
Historical NAV and Market Cap NAV growth drives market cap expansion NAV ¥35.3T (as of June 30, 2024) Arm NAV pro forma SVF1/SVF2/ (as of Jun 30, 2024) LatAm Applying share prices and FX rate as of Aug 6, 2024 ¥24.9T Alibaba SBKK Market Cap 15T T-Mobile/ Deutsche Telekom ¥ Yahoo Japan (as of Jun 30,
Slide 14: 2000 vs 2024
2000 vs 2024 The evaluation of new technology undergoes cycles of hype and correction, ultimately being assessed based on its actual performance. Nasdaq-100 Index AI driven market # Name Market Cap. ($ B) 1 Apple 3,182 Market Cap. # Name 2 Microsoft 2,937 ($ B) 3 NVIDIA 2,471 1 Cisco Systems 552 17,
Slide 15: Major Listed Stocks: Price Trends
Major Listed Stocks: Price Trends (Since Sep 30, 2023) Although Arm and SBKK share prices have recently declined, major stocks reached new record highs since their listings All-time High All-time High All-time High ($) Jul 10 $186.46 (¥) Jul 10 ¥2,088.5 ($) Aug 6 $189.86 200 200 2,500 2,000 150 150
Slide 16: Historical Equity Value of Holdings
Historical Equity Value of Holdings Significant growth in Arm’s value boosted the equity value of holdings by over ¥20T (~2.3x) in a year 38.3 Net of asset-backed finace 30.3 21.0 (¥ T) 27.9 0.01 Alibaba $163.62 Share price 21.7 as of Jun 30 14.4 12.2 16.9 18.4 6.9 0.0 4.3 3.7 9.2 8.3 8.8 8.3 SVF1+2
Slide 17: Historical LTV
Historical LTV*1 Managed with a significant buffer 25% 18.2% 14.5% 15.0% 14.0％ Average LTV over the 11.0% 10.6% 11.5% 10.9% past three years 8.0% 8.4% 7.8% *2 Jun 2022 Sep 2022 Dec 2022 Mar 2023 Jun 2023 Sep 2023 Dec 2023 Mar 2024 Jun 2024 Pro forma 試算値 • Pro forma (as of Jun 2024): Based on the ass
Slide 18: Cash Position and Future Bond Redemptions
Cash Position and Future Bond Redemptions Maintain ample cash position, well over 2-year worth of bond redemptions Cash position Bond redemption schedule*3 ¥4.6 T *1 (¥ B) 795.0 Undrawn commitment line*2 Bond redemptions 3,813.7 for the next 2 years (¥1.4T*4) ＞ Completed refinancing 301.9 861.6 693.
Slide 19: Currency Breakdown and Yield of Cash Position
Currency Breakdown and Yield of Cash Position Continuing high yield operations primarily with USD deposits Breakdown of cash position*1 Yield for SBG USD deposits, etc. (¥ T) (%) 3.8 5.2% 5.5% 5.5% 5.5% 5.4% FF Rate (Upper Limit) Yield*2 4.9% Subsidiaries 0.9 4.4% US 10Y Treasury 4.5% yield JPY 0.8
Slide 20: Historical Invested Amounts (SVF + SBG)
Historical Invested Amounts (SVF + SBG) Invested $1.9B in Q1 ($ B) FY2022 total FY2023 total 2.5 $4.0B $3.9B SBG*1 0.2 1.8 1.9 1.5 0.9 1.2 SVF*2 2.3 1.1 0.5 0.5 0.5 0.1 0.2 0.1 0.9 0.3 0.3 0.6 0.4 0.4 0.4 0.2 0.3 0.3 0.1 0.1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 FY2022 FY2023 FY2024 *1 Investment by SBG and it
Slide 21: Bond Redemption Schedule
Bond Redemption Schedule Bond issuances are managed with due consideration for cash position and market environment. Completed refinancing for bond redemptions in FY24 (¥ B) 1,640.9 Domestic senior bonds 389.8 Domestic subordinated bonds Domestic hybrid bonds Foreign currency-denominated senior note
Slide 22: Bond Issuances in 2024
Bond Issuances in 2024 Already secured ¥1.5T equiv. in funding, completing FY2024 bond refinancing. Next redemption is in April 2025 March April June July Foreign Domestic Domestic Domestic currency- institutional retail bonds retail bonds denominated bonds notes ¥550.0B ¥100.0B ¥550.0B ¥301.9B equi
Slide 23: Issuance of Foreign Currency-denominated Senior Notes (July)
Issuance of Foreign Currency-denominated Senior Notes (July) First foreign currency-denominated senior notes issuance in three years since 2021. Issued amid continuous tightening of our credit spread Spread of SBG foreign currency denominated senior notes*3 Total size ~$1.9B (¥301.9B equiv.)*1 bps P
Slide 24: Issuance of Domestic Retail Senior Bonds (June)
Issuance of Domestic Retail Senior Bonds (June) Following the retail bonds issued in March, strong appetite was observed #63 Senior retail bonds Issuance spreads (Fukuoka SoftBank HAWKS Bond) (Comparison with recent domestic bonds) The spread over government 259bp Amount ¥550.0B 260 bp bonds (7-year
Slide 25: Investor Engagement
Investor Engagement Aim to establish and deepen trust through active engagement with investors and analysts. Consider every stakeholder and reflect in corporate actions Investor engagement structure Major events Issuance of SoftBank report Three-hub system: Japan, US, and UK) • General meetings of (
Slide 26: SBG Stand-alone Interest-bearing Debt
SBG Stand-alone Interest-bearing Debt*1 While non-recourse debt decreased due to settlement of financial liabilities relating to prepaid forward contracts, interest-bearing debt slightly increased due to domestic bond issuances Main changes from March 31, 2024 (¥ B) • Settlement of prepaid forward t
Slide 27: SBG Stand-alone Cash Position
SBG Stand-alone Cash Position Continue to maintain ample cash position (¥ B) SB Northstar 5,171.3 29.6 4,397.6 40.6 3,956.1 3,771.1 3,831.2 22.2 28.7 17.6 Main changes from March 2024 5,141.6 Increase Decrease 4,357.0 ・Cash settlement of collar transaction 3,742.4 3,934.0 3,813.7 ・Domestic bond issu
Slide 28: SBG Stand-alone Net Interest-bearing Debt
SBG Stand-alone Net Interest-bearing Debt Adjusted net interest bearing-debt increased mainly due to rise in SBG stand-alone gross interest-bearing debt (¥ B) 10,363.5 10,515.1 9,978.8 10,023.3 8,941.6 Finance-related adjustments 7,534.1 Asset-backed finance, etc. ¥7,167.0B 7,536.8 7,810.2 Hybrid fi
Slide 29: Funding and Fund Management Plans for FY2024
Funding and Fund Management Plans for FY2024 Flexibly select methods and scale while closely monitoring market conditions Products Plans Domestic bond Primarily anticipated for refinancing Completed refinancing for FY2024 Foreign currency note Primarily anticipated for refinancing Bank loan/ Commitm
Slide 30: Historical Credit Ratings
Historical Credit Ratings First upgrade in 12 years Acquisition of Acquisition Acquisition Acquisition Listing Listing JCR A Japan Telecom of Vodafone KK of Sprint of Arm of SBKK of Arm A+ 14 A 13 A- 12 (Stable) A- BBB+ 11 BBB10 BBB-9 S&P BB+ 8 BB 7 BB+ （Stable） BB BB- 6 Upgraded B+ 5 in just 1 year
Slide 31: FY24 Financial Strategy
FY24 Financial Strategy Steadfast financial principles Flexibly respond to all environmental changes Maintain LTV below 25% in normal times 1 (upper threshold of 35% even in times of emergency) Adhering to financial policy 2 Maintain at least 2-year worth of bond redemptions in cash 3 Secure recurri
Slide 32: Newly Authorized Share Repurchase Program
Newly Authorized Share Repurchase Program Total amount (maximum) ¥500B Repurchase period: From Aug 8, 2024 to Aug 7, 2025 (Note) For details, refer to the press release dated Aug 7, 2024, "Resolution regarding Share Repurchase” Finance 29
Slide 33: Appendix
Appendix
Slide 34: SBG Credit Spread
SBG Credit Spread Spread of SBG foreign currency- denominated senior notes SBG 5-year CDS bps 500 bps 700 USD 1.9Y USD 3.9Y USD 6.9Y SBG 5Y CDS (JPY) EUR 2.4Y EUR 4.9Y EUR 7.9Y 450 600 400 500 350 300 400 250 300 200 200 150 100 100 50 0 0 Dec 2022Mar 2023 Jun 2023 Sep 2023 Dec 2023 Mar 2024 Jun 202
Slide 35: Calculation of Equity Value of Holdings as of Jun 30, 2024
Calculation of Equity Value of Holdings as of Jun 30, 2024 $1 = ¥161.07 ¥44.4T （unadjusted） Equity value of holdings Adjustment for (¥ T) Equity value of holdings ー ＝ asset-backed finance (adjusted) （unadjusted） Prepaid Forward Contracts, etc. Payable 923M Share price ¥21.0T ＝ 4.3 amount for Margin
Slide 36: LTV Calculation: SBG Stand-alone Equity Value of Holdings
LTV Calculation: SBG Stand-alone Equity Value of Holdings (L) Adjusted ¥2.98T SBG stand-alone net debt =7.8% (V) Adjusted SBG stand-alone equity value of holdings*1 ¥38.26T (¥ T) Adjusted SBG Major SBG’s interest in Other investments = + + stand-alone equity value of holdings assets SVF1&2 & LatAm F
Slide 37: LTV Calculation: Details of Equity Value of Holdings (1/2)
LTV Calculation: Details of SBG Stand-alone Equity Value of Holdings (1/2) (¥ T) Assets Value Calculation method (a) Arm 21.02 Before adjustment for asset-backed finance and deduction of payable Multiplying the number of Arm ADSs equivalent to the number of shares held by SBG by the amount of the co
Slide 38: LTV Calculation: Details of Equity Value of Holdings (2/2)
LTV Calculation: Details of SBG Stand-alone Equity Value of Holdings (2/2) (¥ T) Assets Value Calculation method (g) T-Mobile 2.42 Number of T-Mobile shares held by SBG × the share price*1 (h) Deutsche Telekom 0.37 Before adjustment 0.91 Number of DT shares held by SBG × the share price Adjustment f
Slide 39: LTV Calculation: SBG Stand-alone Net Debt
LTV Calculation: SBG Stand-alone Net Debt (L) Adjusted SBG stand-alone net debt*1 ¥2.98T (V) Adjusted SBG stand-alone ¥38.26T =7.8% equity value of holdings (¥ T) Adjusted SBG Consolidated Net debt at self- Other stand-alone net financing entities, debt = net debt - etc. - adjustments 2.98 15.62 5.1
Slide 40: LTV Calculation: Details of SBG Stand-alone Net Debt
LTV Calculation: Details of SBG Stand-alone Net Debt (¥ T) SBG stand-alone net debt Consolidated net interest-bearing debt - net interest-bearing debt (before adjustment) 10.52 at self-financing entities*1 For hybrid bonds and hybrid loans with maturity dates, deduct 50% from interest-bearing debt;
Slide 41: Adjustment for Asset-backed Finance in LTV and NAV Calculation
Adjustment for Asset-backed Finance in LTV and NAV Calculation Non-recourse asset-backed finance is deducted from debt. Value of assets required for settlement is deducted from assets (¥ T) Forward/Collar 1 transactions 2 Margin loan 44.4 Main shares Alibaba SBKK, Arm 1 Asset-backed used 4.3 finance
Slide 42: Geographical Portfolio Diversification
Geographical Portfolio Diversification Proportion of China decreased significantly. Proportion of EMEA increased significantly due to growth of Arm’s value Net of asset-backed finance 10% 6% China 10% Japan 29% 17% 6% APAC (excluding China and Japan） 12% 13% 9% 32% 62% EMEA 20% 4% 5% 25% 2% Latin Am
Slide 43: Breakdown of Equity Value of Holdings
Breakdown of Equity Value of Holdings Net of asset- backed finance 21% 22% 39% 14% 14% 55% 11% 8% 8% 5% 7% 18% 6% 16% 8% SBKK 19% 7% T-Mobile / Deutsche Telekom 24% 10% SVF1(64 investments) 21% 9% 2% 4% 5% 11% SVF2(271 investments) 3% LatAm (89 investments) 9% 8% 8% 5% Others Jun 2021 Jun 2022 Jun 2
Slide 44: Proportion of Listed Shares
Proportion of Listed Shares Proportion of listed shares is 82%, resulting in the portfolio's liquidity being at an extremely high level Net of asset- backed finance 18% Unlisted 27% 51% 64% 82% Listed 73% 49% 36% Jun 2021 Jun 2022 Jun 2023 Jun 2024 * Proportion of listed shares: Shares of Alibaba, A
Slide 45: Breakdown by Currency
Breakdown by Currency Investment and monetization flows are mainly in USD, while debt refinancing is principally in the same currency Investments and monetization Debt composition Cash position: ¥3.8T*1 Equity value of holdings: ¥38.3T*2 Debt*3: ¥7.1T Subsidiaries EUR Net of asset- JPY backed financ
Slide 46: Increase/Decrease in Cash Position (FY2024Q1)
Increase/Decrease in Cash Position (FY2024Q1) Maintained ample cash position*1 through monetization and funding despite new investments and cash settlement, etc. (¥ T) Financing, repayment, etc.*2 0.2 Cash settlement of collar Monetization through 0.5 transactions using T-Mobile shares*4 sale of ass
Slide 47: Consolidated Interest-bearing Debt/ Cash Position/ Net Interest-bearing Debt
Consolidated Interest-bearing Debt/ Cash Position/ Net Interest-bearing Debt Consolidated Interest-bearing Debt*1 (¥ B) Jun 2023 Sep 2023 Dec 2023 Mar 2024 Jun 2024 SBG stand-alone 14,083.3 14,335.8 13,765.7 14,297.5 14,328.8 Incl. SB Northstar - - - - - SVF1&2 and LatAm Funds 1,419.9 542.2 513.2 54