Softbank Group Corp. · TSE:9984
Softbank — FY2015 Earnings Presentation
62 slides from Softbank's earnings presentation, May 10, 2016
Slide 1: Earnings Results for the Fiscal Year Ended March 31, 2016
Earnings Results for the Fiscal Year May 10, 2016 Ended March 31, 2016
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 t
Slide 3: Consolidated Results
Consolidated Results 2
Slide 4: Consolidated Results
Consolidated Results (JPY bn) FY2014 FY2015 Change YoY Net sales 8,504.1 9,153.5 +649.4 +8% Adjusted EBITDA 2,041.6 2,438.9 +397.3 +19% EBIT 918.7 999.5 +80.8 +9% Net income 668.4 474.2 -194.2 -29% Excluding one-time gains * 384.9 474.2 +89.3 +23% (related to Alibaba IPO) *One-time gains: dilution g
Slide 5: Consolidated Net Sales
Net Sales (JPY t) 9.2t +8% Consolidated 3.9 +2% Sprint FX impact Increase in telecom service revenue, 3.1 +4% Domestic Telco product & other sales Consolidated 2.1 +27% YJ & others from July 2011 ’12 ’13 ’14 ’15 (FY) *FY2011: Japanese-GAAP, 2012-15: IFRSs *YJ & others = Yahoo Japan segment + Distrib
Slide 6: Consolidated Adjusted EBITDA
Adjusted EBITDA (JPY bn) 2.4t +19% Consolidated 1.2t +4% Domestic Telco 983.3 +51% Sprint FX impact & cost reduction Consolidated from July 292.3 +7% YJ & others *FY2011: Japanese-GAAP, 2012-15: IFRSs 2011 ’12 ’13 ’14 ’15 (FY) *YJ & others = Yahoo Japan segment + Distribution segment + Others + Reco
Slide 7: Consolidated EBIT
EBIT (JPY bn) 999.5 +9% Consolidated 688.4 +7% Domestic Telco 249.6 +18% YJ & others 61.5 -8% Sprint (IFRSs) 33.8 +240.3 Sprint (USGAAP) Consolidated from July -206.6 2011 ’12 ’13 ’14 ’15 (FY) *FY2011: Japanese-GAAP, 2012-15: IFRSs *YJ & others = Yahoo Japan segment + Distribution segment + Others +
Slide 8: Business Portfolio: Operating Assets
Business Portfolio Operating Investment Assets Assets 7
Slide 9: Business Portfolio: Operating Assets
Business Portfolio SoftBank Domestic Telco Sprint Operating Assets Yahoo Japan Others 8
Slide 10: EBIT Domestic Telco
EBIT Domestic Telco JPY bn 688.4 640.5 • YoY 7% increase • Stable revenue trend • Cost reduction effects 2011 ’12 ’13 ’14 ’15 (FY) *FY2011: Japanese-GAAP, 2012-15: IFRSs *After FY2014: Domestic Telecommunications business Up to FY2013: Mobile Communications business + Fixed-line business + Broadband
Slide 11: ARPU (Main Subscribers) Domestic Telco
ARPU (Main Subscribers) Domestic Telco JPY 4,580 4,680 Service 500 560 ARPU • YoY 2% increase • Service ARPU increasing 4,110 Telecom 4,080 ARPU 2014 ’15 (FY) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 10
Slide 12: Cumulative Subs (FTTH Service) Domestic Telco
Cumulative Subs (FTTH Service) Domestic Telco 1,720k 1,218k • Exceeds 1.7mil • Bundle plan leads to 715k reduced churn 341k 119k 2014 ’15 (FY) Q4 Q1 Q2 Q3 Q4 *SoftBank Hikari includes the data of SoftBank Air. 11
Slide 13: New Sports Content
New Sports Content (from Mar. 17) Live streaming of professional baseball games to smartphones (10 out of 12 teams) © Fukuoka SoftBank HAWKS © Hokkaido Nippon-Ham Fighters © Chiba Lotte Marines © Seibu Lions © ORIX BUFFALOES © RAKUTEN BASEBALL HANSHIN Tigers. CHUNICHI DRAGONS © Tokyo DeNA BAYSTARS 1
Slide 14: Smartphone Data Connectivity Domestic Telco
Smartphone Data Connectivity Domestic Telco 98.7% • Maintain high level 98.5% • Continue efficient CAPEX 97.9% Source: Agoop (as of May 8, 2016) 13
Slide 15: Free Cash Flow Domestic Telco
Free Cash Flow Domestic Telco JPY 402.2bn • Generating FCF • EBITDA steady 113.3bn 2014 2015 (FY) *IFRSs Excluding eliminations within SoftBank Group Corp. 14
Slide 16: Business Portfolio: Operating Assets
Business Portfolio SoftBank Domestic Telco Sprint Operating Assets Yahoo Japan Others 15
Slide 17: Turnaround Strategy Update
Turnaround Strategy Update Net Adds Improvement Revenue Stabilization OPEX Reduction Diverse Network Financing Methods Improvement 16
Slide 18: Net Additions (Postpaid)
Net Additions (Postpaid) 1.25mil • Up nearly 1.5mil (YoY) • Highest in 3 years -212k -339k 2013 ’14 ’15 (FY) *Sprint platform 17
Slide 19: Net Additions (Postpaid Phone)
Net Additions (Postpaid Phone) 438k • Up nearly 2mil (YoY) • Highest in 3 years -1.3mil -1.5mil 2013 ’14 ’15 (FY) *Sprint platform 18
Slide 20: Net Additions (Postpaid Phone) vs Peers
Net Additions (Postpaid Phone) T-Mobile 877k • Surpassed Verizon & AT&T for the first time on record Sprint • 6th consecutive quarter of 22k YoY improvement Verizon -8k AT&T -447k ’14 ’15 ’16 Jan. - Mar. Apr. - June July - Sept. Oct. - Dec. Jan. - Mar. Apr. - June July - Sept. Oct. - Dec. Jan. - Mar
Slide 21: Churn (Postpaid)
Churn (Postpaid) 2.09% 2.00% • Lowest ever for a fiscal year • Drastically reduced 1.61% (YoY 48bp improvement) 1.0% 2013 ’14 ’15 (FY) *Sprint platform 20
Slide 22: Sprint Revenue
Revenue (Wireless Service Revenue + IB/Lease Revenue) USGAAP $29.3bn $28.4bn $28.4bn IB/lease revenue • Stabilized Wireless service revenue • Up slightly (YoY) 2013 ’14 ’15 (FY) 21
Slide 23: Cost Reduction
Cost Reduction USGAAP $19.2bn $17.9bn Amount of reduction -$1.3bn SG&A • YoY $1.3bn reduction Cost of services 2014 2015 (FY) 22
Slide 24: Sprint Adjusted EBITDA
Adjusted EBITDA USGAAP $8.1bn Joined SoftBank Group $6.0bn $5.7bn • YoY $2bn+ improvement • YoY 36% increase 2011 ’12 ’13 ’14 ’15 (FY) 23
Slide 25: Sprint EBIT
EBIT USGAAP Joined SoftBank Group $310mil • Positive for the 1st time in 9 years -$1,450mil -$1,895mil 2011 ’12 ’13 ’14 ’15 (FY) *FY14 results include impairment loss (-$2,133mil) 24
Slide 26: Liquidity
Liquidity USGAAP USD bn 14~16 Potential funding MLS (Potential) 2~4 Vendor financing 1.2 • Sustain abundant liquidity Network RAN Subsequent transactions • Plan to repay FY16 maturities + MLS + bridge 5.3 Current as they come due committed liquidity $11bn 5.1 Other repayments (Handset lease, etc.) Y
Slide 27: LTE Download Speeds
LTE Download Speeds Nationwide Sprint New York Sprint Verizon Verizon AT&T AT&T T-Mobile T-Mobile Oct-15 2015 Oct. Nov-15 Nov. Dec-15 Dec. Jan-16 2016 Jan. Feb-16 Feb. Mar-16 Mar. Oct-15 2015 Oct. Nov-15 Nov. Dec-15 Dec. Jan-16 2016 Jan. Feb-16 Feb. Mar-16 Mar. Chicago Sprint Houston Verizon Sprint
Slide 28: Adjusted EBITDA
Adjusted EBITDA USGAAP $9.5bn~$10bn $8.1bn $6.0bn $5.7bn $5.7bn • Achieved guidance for FY2015 $5.1bn $4.8bn • Accelerate transformation 2010 ’11 ’12 ’13 ’14 ’15 ’16 (FY) Guidance 27
Slide 29: FY2016 Guidance
FY2016 Guidance 1 Adjusted EBITDA $9.5-$10bn 2 Operating Income $1-1.5bn Approx. 3 Cash CAPEX $3bn Around 4 Adjusted FCF break-even Cash CAPEX excluding the CAPEX associated with purchasing leased devices in indirect channels Adjusted FCF: the cash provided by operating activities + the cash used in
Slide 30: Business Portfolio: Operating Assets
Business Portfolio SoftBank Domestic Telco Sprint Operating Assets Yahoo Japan Others 29
Slide 31: Yahoo Japan Net Income
Net Income 171.6 JPY bn 133.0 • 19 years of growth (FY) 2002 ’04 ’06 ’08 ’10 ’12 ’14 ’15 (FY) *Up to FY2012: Japanese-GAAP, 2013-: IFRSs Net income: net income attributable to the owners of the parent 30
Slide 32: Advertising Revenue
Advertising Revenue JPY bn 266.9 249.8 126.4 97.7 (+29%) Display ads • Growing display ads • Yahoo! Display Ad Network contributes Search ads (FY) 2013 ’14 ’15 (FY) 31
Slide 33: Shopping Transaction Value
Shopping Transaction Value ショッピング JPY bn 112.8 +62% ＜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。 ショッピング ショッピング ●その他色指定 69.7 • Highest growth ever 白抜き利用の場合（背景色は任意） ショッピング ※紫ロゴは原則使用しないでください ＜紫＞ PANTONE 259 DIC 227 C
Slide 34: Business Portfolio: Investment Assets
Business Portfolio Operating Investment Assets Assets 33
Slide 35: What we are excited about
What we are excited about 1 World-class entrepreneurs in emerging markets 2 Mobile & cloud enabling brand new business models 3 Fundamental changes in underlying IT infrastructure stack 4 Breakthrough new tech: AI, Autonomous Cars, VR/AR, IoT 5 Transformation in every industry through technology 34
Slide 36: What's happening in private technology investing
What’s happening in private technology investing Unprecedented equity capitalization High public market volatility in private market Few IPOs Private valuation and poor IPO performance disconnect persists More flat rounds & down rounds Profitable growth vs. growth at all costs 35
Slide 37: Why SoftBank is well positioned
Why SoftBank is well positioned Invest with conviction, at scale Long-term partner Favorable access to capital Global perspective Operational value-add 36
Slide 38: Investment Assets
Business Portfolio E-commerce Transportation Investment Games & Media Assets FinTech 37
Slide 39: E-commerce
E-commerce EDM gabe cow deal coupan tokopedia = ovo
Slide 40: Gross Merchandise Volume
Gross Alibaba Merchandise Volume RMB 3.1t JPY 60t 60t 57t (net sales) 50t • Inverted on FY basis 40t • World’s largest retailer 30t • Surpassed RMB 3t 20t 10t (Source) Created by SoftBank Group Corp. based on publicly available historical Alibaba Apr. ’11 - Mar. ’12 Apr. ’13 - Mar. ’14 Apr. ’15 - Ma
Slide 41: Total Revenue
RMB 101bn Total Alibaba Revenue 2t JPY USGAAP 1.5t • YoY 33% increase • Driven by rapid growth of China commerce retail biz • Surpassed RMB 100bn (Source) Created by SoftBank Group Corp. based on publicly available historical Apr. ’11 Apr. ’12 Apr. ’13 Apr. ’14 Apr. ’15 information published by Alib
Slide 42: Mobile Revenue
Mobile AlibabaRevenue 973.7bn JPY USGAAP • Mobile revenue YoY 2.8x • Mobile MAU increase YoY 42%, reached 410mil 345.1bn • Revenue / mobile MAU YoY 2x MAU: Monthly Active Users (Source) Created by SoftBank Group Corp. based on publicly available historical Apr. ’12 Apr. ’13 Apr. ’14 Apr. ’15 informa
Slide 43: Net Income Non-GAAP
Non-GAAP Alibaba Net Income JPY 826.8bn USGAAP Non-GAAP (Excluding the gains and losses related to share based compensation expenses, amortization of intangible assets, revaluation of investments etc.) 676.7bn • YoY 22% increase (Source) Created by SoftBank Group Corp. based on publicly available hi
Slide 44: Gross Merchandise Value
Gross Alibaba Merchandise Value YoY 90% • Repeat purchase rates increasing • Investing in supply chain technology • Fastest growing digital wallet in India 2015 2016 (FY) Note: FY end March 43
Slide 45: Retail Revenue
Alibaba Retail Revenue YoY 293% • Leader in mobile commerce • Launched 1 of 2 mega fulfillment centers in March 2016 TTM: trailing 12 months counted backwards from March 2015 2016 (TTM) Retail revenue: revenue from goods delivered directly through Coupang's end-to-end fulfillment operations, which i
Slide 46: Gross Merchandise Value
Gross Alibaba Merchandise Value YoY 254% • Largest e-commerce platform • Strong customer and merchant retention • Launched digital marketplace 2015 2016 (TTM) TTM: trailing 12 months counted backwards from March 45
Slide 47: Daily Booked Room Nights
Daily Alibaba Booked Room Nights YoY 15x • Clear market leadership • Profitable unit economics • 95% direct traffic • 50% mobile demand 2015 2016 (CY) Q1 Q1 46
Slide 48: Transportation
Transportation O OLA Grad UO 8a
Slide 49: Expected Arrival Time Improvement
Expected Alibaba Arrival Time 55% Improvement • Largest network of customers and cabs in India YoY • Presence across price points • Prime Minister of India launched Ola’s E-Rickshaw service 2015 2016 Mar. Mar. 48
Slide 50: Quarterly Bookings
Quarterly Alibaba Bookings YoY 5.3x • Extend market share in Private Car and Bike • Leveraging all transport options to deliver best experience • >5x YoY increase in MAU 2015 2016 (CY) Jan. - Mar. Jan. - Mar. MAU: Monthly Active Users 49
Slide 51: Private Car Completed Rides
Alibaba Private Car Completed Rides YoY 20x • World’s largest transportation platform by number of rides • Clear leader in China • 230 out of 300 cities are profitable 2015 2016 Mar. Mar. 50
Slide 52: Games & Media
Games & Media hike GungHo MESSENGER Online Entertainment, Inc.
Slide 53: Average US iPhone Top Grossing Rank
Average Alibaba US iPhone Top Grossing Rank (2016Q1) #1 #2 • Three games among the top-10 grossing games in key markets #10 #20 Note: Clash Royale ranking is the average since launch on Mar. 2, 2016 52
Slide 54: Puzzle & Dragons Radar App
Puzzle Alibaba& Dragons Radar App (From Mar. 17) Puzzle & Dragons themed treasure hunt app • Exceeds 1mil DLs in 2 days 53
Slide 55: Monthly Message Volume
Monthly Alibaba Message Volume YoY 2.4x • First Indian Internet company >100m users • Strong engagement - 120 minutes/week • >100M games played in first month after launch 2015 2016 Mar. Mar. 54
Slide 56: FinTech
FinTech 55
Slide 57: Funded Amount
Funded Alibaba Amount YoY • Strong loan volume growth continues 3x • 135k+ high credit quality member base • Launched wealth management offering 2014 ’15 ’16 Jan. - Mar. Jan. - Mar. Jan. - Mar. 56
Slide 58: Business Portfolio: Operating Assets
Business Portfolio Operating Investment Assets Assets 57
Slide 59: Enhance shareholder returns
Dividend per Share FY2014 FY2015 FY2016 (Plan) (Plan) Interim JPY 20 JPY 20 JPY 22 dividend Year-end JPY 20 JPY 21 JPY 22 dividend Annual JPY 40 JPY 41 JPY 44 dividend Enhance shareholder returns 58
Slide 60: Conclusion
Conclusion 1. Domestic Telco generating FCF 2. Sprint turnaround strategy making progress 3. Investment strategy on track 59
Slide 61: Toward Further Growth
Toward Further Growth wa OOftBank Group
Slide 62: Adoption of IFRSs and definition of terms
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. Definition of terms etc. in this material. Free cash flow = cash flows from operating activities +