Softbank Group Corp. · TSE:9984
Softbank — Q3 FY2015 Earnings Presentation
71 slides from Softbank's earnings presentation, Feb 10, 2016
Slide 1: Earnings Results for the 9-month Period Ended December 31, 2015
Earnings Results for the 9-month Period February 10, 2016 Ended December 31, 2015
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 Q1-3 Q1-3 Net sales 6,309.0 6,810.2 +501.2 +8% EBITDA 1,542.8 1,910.5 +367.7 +24% EBIT 741.6 875.3 +133.7 +18% Net income 579.4 429.0 -150.5 -26% Excluding one-time gains* 309.9 429.0 +119.1 +38% (related to Alibaba) *One-time gains: dilution ga
Slide 5: Consolidated Net Sales
Net Sales (JPY t) 6.8t +8% Consolidated 2.9 +4% Sprint FX impact Increase in telecom service revenue, 2.3 +3% Domestic Telco product & other sales Consolidated from July 0.4 +44% Yahoo Japan Consolidation of ASKUL 2011 ’12 ’13 ’14 ’15 (FY) Q1-3 Q1-3 Q1-3 Q1-3 Q1-3 *FY2011: Japanese-GAAP, 2012-15: IF
Slide 6: Consolidated EBITDA
EBITDA (JPY bn) 1.9t +24% Consolidated 930.2 +4% Domestic Telco 744.8 +61% Sprint FX impact & cost reduction Consolidated from July 156.2 +2% Yahoo Japan 2011 ’12 ’13 ’14 ’15 (FY) Q1-3 Q1-3 Q1-3 Q1-3 Q1-3 *FY2011: Japanese-GAAP, 2012-15: IFRSs 5
Slide 7: Consolidated EBIT
EBIT (JPY bn) 875.3 +18% Consolidated 598.3 +8% Domestic Telco 193.7 +37% Yahoo Japan One-time gain on consolidation of ASKUL (+59.4) 59.5 +49% Sprint Consolidated from July 2011 ’12 ’13 ’14 ’15 (FY) Q1-3 Q1-3 Q1-3 Q1-3 Q1-3 *FY2011: Japanese-GAAP, 2012-15: IFRSs 6
Slide 8: 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 598.3 556.0 • YoY 8% increase • Stable revenue trend • Cost reduction effects 2011 ’12 ’13 ’14 ’15 (FY) *FY2011: Japanese-GAAP, 2012-15: IFRSs Q1-3 Q1-3 Q1-3 Q1-3 Q1-3 *After FY2014: Domestic Telecommunications business Up to FY2013: Mobile Communications business + Fixed-
Slide 11: ARPU (Main Subscribers) Domestic Telco
ARPU (Main Subscribers) Domestic Telco JPY 4,710 4,720 Service 490 560 ARPU • Stable trend • Service ARPU increasing 4,230 4,170 Telecom ARPU • Telecom ARPU decreasing 2014 ’15 (FY) Q1 Q2 Q3 Q4 Q1 Q2 Q3 10
Slide 12: Churn (Main Subscribers) Domestic Telco
Churn (Main Subscribers) Domestic Telco 1.57% 1.38% 1.41% • Focus on bundling with 1.30% 1.28% broadband and electricity 1.24% 1.19% • Toward improved customer satisfaction 2014 ’15 (FY) Q1 Q2 Q3 Q4 Q1 Q2 Q3 11
Slide 13: Bundle Services Domestic Telco
Bundle Services Domestic Telco • Support households Home Bundle Discount 1. Denki Set (Electricity) • Focus on acquisition of family contracts 2. Hikari Set (FTTH service) 12
Slide 14: Cumulative Subs (FTTH Service) Domestic Telco
Cumulative Subs (FTTH Service) Domestic Telco 1,218k • Exceeds 1.2mil 715k • Bundle plan leads to churn improvement 341k 119k 2014 ’15 (FY) Q4 Q1 Q2 Q3 *SoftBank Hikari includes the data of SoftBank Air. 13
Slide 15: Smartphone Data Connectivity Domestic Telco
Smartphone Data Connectivity Domestic Telco 98.8% • Maintain high level 98.5% • Continue efficient CAPEX 97.9% Source: Agoop (as of Feb. 7, 2016) 14
Slide 16: Free Cash Flow Domestic Telco
Free Cash Flow Domestic Telco JPY 239.4bn • Generating FCF • EBITDA steady • CAPEX peaked out 3.6bn 2014 2015 (FY) *IFRSs Q1-3 Q1-3 Excluding eliminations within SoftBank Group Corp. 15
Slide 17: Business Portfolio: Operating Assets
Business Portfolio SoftBank Domestic Telco Sprint Operating Assets Yahoo Japan Others 16
Slide 18: Sprint Total Net Operating Revenue
Total Net Operating Revenue USGAAP $9.0bn $8.3bn $8.0bn $8.0bn $8.1bn • Stabilized over last 3 quarters • Expect increase in FY2016 2014 ’15 ’15 ’15 ’15 (CY) Oct. - Dec. Jan. - Mar. Apr. - June July - Sept. Oct. - Dec. 17
Slide 19: Sprint Adjusted EBITDA
Adjusted EBITDA $6.0bn USGAAP Joined SoftBank Group $4.3bn $3.9bn • YoY 41% increase • Good progress on cost reduction 2011 ’12 ’13 ’14 ’15 (CY) Apr. - Dec. Apr. - Dec. Apr. - Dec. Apr. - Dec. Apr. - Dec. 18
Slide 20: Sprint EBIT
EBIT USGAAP Joined SoftBank Group $302mil -$80mil • Improving trend • Good progress on cost reduction -$1,879mil 2011 ’12 ’13 ’14 ’15 (CY) Apr. - Dec. Apr. - Dec. Apr. - Dec. Apr. - Dec. Apr. - Dec. *Excluding the impact from impairment in Oct. - Dec. 2014. 19
Slide 21: Sprint Turnaround Strategy
Sprint » Turnaround Strategy
Slide 22: Turnaround Strategy
Turnaround Strategy Net Additions Improvement OPEX Reduction (Postpaid) Diverse Network Financing Methods Improvement 21
Slide 23: Net Additions (Postpaid)
Net Additions (Postpaid) +501k • Lower churn • Net port positive for the 4th consecutive quarter • Highest postpaid net ports on record *Sprint platform 2013 ’14 ’14 ’15 ’15 (CY) *In FY15Q2 certain prepaid subscribers who had their payment period extended for a certain period were included in the nu
Slide 24: Net Additions (Postpaid Phone)
Net Additions (Postpaid Phone) +366k • Highest in 3 years • Positive for the 2nd consecutive quarter *Sprint platform 2013 ’13 ’14 ’14 ’15 ’15 (CY) *In FY15Q2 certain prepaid subscribers who had their payment period extended for a certain period were included in the number of postpaid subscribers. T
Slide 25: Churn (Postpaid)
Churn (Postpaid) • Lowest third quarter in Sprint history • Best YoY improvement in 12 years • Improved customer quality 1.62% and network performance 1.0% 2007 ’09 ’11 ’13 ’15 (CY) Oct. - Dec. Oct. - Dec. Oct. - Dec. Oct. - Dec. Oct. - Dec. *Sprint platform 24
Slide 26: Average Gross Addition CLV
Average Gross Addition CLV +33% • YoY 33% increase • Focus on prime and multi-line customers 2014 2015 Oct. - Dec. Oct. - Dec. CLV: Customer Lifetime Value 25
Slide 27: Turnaround Strategy
Turnaround Strategy Net Additions Improvement OPEX Reduction (Postpaid) Diverse Network Financing Methods Improvement 26
Slide 28: Progress of Cost Reduction
Progress of Cost Reduction USGAAP $14.5bn $13.7bn Amount of reduction -$800mil SG&A • $800mil YTD reduction • Exceeded targets in 2015 Cost of services 2014 2015 Apr. - Dec. Apr. - Dec. 27
Slide 29: Sustainable Run Rate OPEX Reduction (plan)
Sustainable Run Rate OPEX Reduction (plan) USGAAP $2bn or more $0.2bn Cost of products $0.4 0.6bn Cost of services • OPEX reduction with no stone unturned • Confident in plan to achieve $1.2 1.4bn SG&A FY2016 Q4 (run rate) (Note) SG&A: Sales, Marketing, Care and G&A 28
Slide 30: Turnaround Strategy
Turnaround Strategy Net Additions Improvement OPEX Reduction (Postpaid) Diverse Network Financing Methods Improvement 29
Slide 31: Liquidity
Liquidity USGAAP 12 15 USD bn Network 3 5 financing entity 3 4 Handset LeaseCo Sustain abundant liquidity Vendor financing 0.6 Receivables facility 0.8 3.7 Total revolver 3.0 availability Cash, cash equivalents, 2.2 short-term investments 0.2 Potential FY15 FY16 liquidity Note & loan maturities (Not
Slide 32: Diverse Financing Methods
Diverse Financing Methods 1 Vendor financing 2 Handset lease financing 3 Increased existing receivable facilities 4 Establish NW related financing entity 31
Slide 33: Turnaround Strategy
Turnaround Strategy Net Additions Improvement OPEX Reduction (Postpaid) Diverse Network Financing Methods Improvement 32
Slide 34: LTE Download Delivered Speeds
LTE Download Delivered Speeds Sprint Verizon • Fastest AT&T • Deployed LTE Plus in 150 major markets T-Mobile LTE Plus: takes advantage of Sprint's triband spectrum portfolio Apr. Aug. Dec. (800 MHz, 1900 MHz and 2.5 GHz), coupled with technology 2015 enhancements like carrier aggregation and antenn
Slide 35: Voice Drop Rate
Voice Drop Rate 0.9% • Improving trend 0.4% • Lowest ever 2014 2014 2015 2015 (CY) H1 H2 H1 H2 Source: RootMetrics 34
Slide 36: RootScore Awards
RootScore Awards First-place 212 • Most awards ever 135 • Most improved carrier • Beating T-Mobile for the 1st time ever 51 RootScore Awards Number of outright or shared first-place for 6 indexes of network performance measured in 125 metro markets (Ref.) 6 indexes: overall, reliability, speed, data
Slide 37: Densification and Optimization Strategy
Densification and Optimization Strategy • Improve network quality through incremental sites • Maximize performance and cost efficiency 36
Slide 38: Turnaround Strategy
Turnaround Strategy Net Additions Improvement OPEX Reduction (Postpaid) Diverse Network Financing Methods Improvement 37
Slide 39: Sprint Adjusted EBITDA
Adjusted EBITDA $9.5bn USGAAP ~$10bn $7.7bn ~$8bn • Guidance for FY2015 raised $6.8bn $6.0bn ~$7.1bn $5.7bn $5.7bn • Accelerate cost reduction $5.1bn $4.8bn • Forecast positive operating income for FY2015 ($100mil~$300mil) 2010 ’11 ’12 ’13 ’14 ’15 ’16 (FY) forecast preliminary estimate 38
Slide 40: Business Portfolio: Operating Assets
Business Portfolio SoftBank Domestic Telco Sprint Operating Assets Yahoo Japan Others 39
Slide 41: Yahoo Japan Advertising Revenue
Advertising Revenue JPY bn 66.0 62.1 24.8 32.6 Display (+31%) ads • Growing display ads • Yahoo! Display Ad Network contributes Search ads (FY) 2011 ’12 ’13 ’14 ’15 (FY) Q3 Q3 Q3 Q3 Q3 40
Slide 42: Shopping Transaction Value
Shopping Transaction Value (YoY growth) +48% • YoY 48% increase • New e-commerce strategy successful • Promotion successful +12% +3% 2013 ’14 ’15 (FY) Q3 Q3 Q3 *Transaction value of Yahoo! Shopping and LOHACO 41
Slide 43: TOB for Ikyu Corporation Completed (Feb. 3)
TOB for Ikyu Corporation Completed (Feb. 3) • Enhance online lodging and restaurant reservation services • Further growth through synergies with Yahoo Japan Photo source: Tsuhan Shinbun 42
Slide 44: Business Portfolio: Operating Assets
Business Portfolio SoftBank Domestic Telco Sprint Operating Assets Yahoo Japan Others 43
Slide 45: Pepper
Pepper Sold out in 1 minute for 7 consecutive months (1,000 units each) 44
Slide 46: Pepper Introduced in 500+ Companies
Introduced in 500+ companies 45
Slide 47: Investment Assets
Business Portfolio Operating Investment Assets Assets 46
Slide 48: Business Portfolio: Investment Assets
Business Portfolio E-commerce Transportation Investment Games Assets FinTech 47
Slide 49: E-commerce
E-commerce EDM Babs 17 deal coupan tokopedia = ovo
Slide 50: Alibaba Gross Merchandise Volume
Gross Alibaba Merchandise Volume JPY 60t JPY 57t 50t • Single’s day sales contribute 40t • Rural China boosts 30t • Increase in user base and 20t engagement 10t (Source) Created by SoftBank Group Corp. based on publicly available historical 2007 ’09 ’11 ’13 ’15 (CY) information published by Alibaba
Slide 51: Alibaba Total Revenue
Total Alibaba Revenue 668.2bn JPY USGAAP 506.4bn • YoY 32% increase • Driven by rapid growth of China commerce retail biz • Succeed mobile transition (Source) Created by SoftBank Group Corp. based on publicly available historical 2011 ’12 ’13 ’14 ’15 (CY) information published by Alibaba Group Holdi
Slide 52: Alibaba Mobile Revenue
Mobile AlibabaRevenue JPY 362.6bn USGAAP • Mobile revenue YoY 3x • Mobile MAUs increase YoY 48%, reached 393mil 124.2bn • Revenue / mobile MAU YoY 2x MAU: Monthly Active Users (Source) Created by SoftBank Group Corp. based on publicly available historical 2012 ’13 ’14 ’15 (CY) information published
Slide 53: Alibaba Non-GAAP Net Income
Non-GAAP Alibaba Net Income JPY 316.4bn USGAAP Non-GAAP (Excluding the gains and losses related to share based compensation expenses, amortization of intangible assets, revaluation of investments etc.) 253.7bn YoY 25% increase (Source) Created by SoftBank Group Corp. based on publicly available hist
Slide 54: Gross Sales (India e-commerce)
Gross Alibaba Sales YoY • Diwali sales 3x YoY 90% • Exceeds 250k merchants • 14mil digital wallets within 3 months of launch 2012 ’13 ’14 ’15 (CY) Oct. - Dec. Oct. - Dec. Oct. - Dec. Oct. - Dec. Diwali: ancient Hindu festival celebrated every year. 53
Slide 55: Retail Revenue (Coupang)
Alibaba Retail Revenue YoY • Strong growth in retail revenue 430% • Rapidly scaling fulfillment operations in 2016 • Leader in mobile commerce 2013 2014 2015 (CY) Retail revenue: revenue from goods delivered directly through Coupang's end-to-end fulfillment operations, which includes the "Coupang Ma
Slide 56: Gross Merchandise Volume (Indonesia)
Gross Alibaba Merchandise Volume YoY • Lead EC marketplace in Indonesia 303% • 500k merchants with product listings • 12mil active SKUs 2012 ’13 ’14 ’15 (CY) Oct. - Dec. Oct. - Dec. Oct. - Dec. Oct. - Dec. SKU: stock keeping units 55
Slide 57: Room Nights (OYO)
Used Alibaba Room Nights 895k YoY • Robust growth, driven by direct 34x channels and mobile • Acquisition of ZO Rooms • Launch premium OYO experience through flagship properties 26k 2014 2015 (CY) Oct. - Dec. Oct. - Dec. 56
Slide 58: Transportation
Transportation O OLA Grad G3 57
Slide 59: Quarterly Bookings (Ola)
Quarterly Alibaba Bookings YoY • Product diversification (Ola Prime, Share and Shuttle) 10x • Strategic alliance with Lyft, Didi, Grab • Launched leasing program for drivers 2014 2015 (CY) Oct. - Dec. Oct. - Dec. 58
Slide 60: Quarterly Bookings (Grab)
Quarterly Alibaba Bookings YoY • Extend market share in Private Car and Bike 6x • Expand product portfolio into deliveries and carpooling • YoY 6x increase in MAUs 2014 2015 (CY) Oct. - Dec. Oct. - Dec. MAU: Monthly Active Users 59
Slide 61: Total Rides (Didi)
Alibaba Total Rides 1.4bn (in 2015) KuaiDi Taxi Didi Taxi YoY • Positive contribution margins 2.5x in multiple cities • Lead transport category with launch of Ride Sharing, Bus and Chauffeur • Increasing clarity on regulations 2014 2015 (CY) Dec. Dec. 60
Slide 62: Games
Games 61
Slide 63: Game Strategy
Alibaba Game Strategy • Maximize existing value • Create new entertaining games • Enhance global user base 62
Slide 64: FinTech
FinTech 63
Slide 65: Funded Amount
Funded Alibaba Amount $5.2bn YoY • New loan volumes accelerating 4x • Maintaining high credit quality across 100k member base • Focus on new financial products including wealth and insurance $1.3bn offerings 2012 ’13 ’14 ’15 (CY) 64
Slide 66: Operating Assets Investment Assets
Business Portfolio Operating Investment Assets Assets 65
Slide 67: Overcame all hurdles
Overcame all hurdles 66
Slide 68: Net Income Mobile EBIT
Net Income Mobile EBIT 1997 ’03 ’09 ’14 2001 ’04 ’07 ’10 2003 ’06 ’09 ’12 ’14 67
Slide 69: Early signs of turnaround
Adjusted EBITDA $9.5bn~$10bn $7.7bn ~$8bn $6.0bn $5.7bn $5.7bn Early signs $5.1bn $4.8bn of turnaround 2010 ’11 ’12 ’13 ’14 ’15 ’16 (FY) forecast preliminary 68 estimate
Slide 70: Toward Further Growth
Toward Further Growth wa OOftBank Group
Slide 71: Adoption of IFRSs, Definition of terms, 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. Definition of terms etc. in this material. Free cash flow = cash flows from operating activities +