Softbank Group Corp. · TSE:9984
Softbank — Q3 FY2018 Earnings Presentation
68 slides from Softbank's earnings presentation, Feb 6, 2019
Slide 1: Earnings Results for the 9-month Period ended December 31, 2018
Earnings Results for the 9-month Period ended December 31, 2018 February 6, 2019
Slide 2: Important Information
IMPORTANT INFORMATION This presentation (this “Presentation”) is furnished to you 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 offer to sell or a solicitation of an offer to buy limited par
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
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Slide 7: Consolidated SoftBank Results
Consolidated SoftBank Results
Slide 8: Consolidated Results
Consolidated Results (JPY bn) FY17 FY18 Q1-Q3 Q1-Q3 Change YoY Net sales 6,811.3 7,168.5 +357.2 +5% EBIT 1,148.8 1,859.0 +710.2 +62% Net income 1,014.9 1,538.4 +523.5 +52% New standards (FY18 Q1-Q3): after applications of IFRS 9 and IFRS 15 Net income: net income to attributable to owners of the par
Slide 9: Net Sales
Net Sales (JPY bn) 7,168.5 6,811.3 2,722.2 2,794.4 Sprint Up 5% 702.9 Yahoo Japan 645.4 2,777.5 SoftBank segment 2,674.2 769.5 893.7 Others FY17 Q1-Q3 FY18 Q1-Q3 New standards (FY18 Q1-Q3): after applications of IFRS 9 and IFRS 15 Previous standards (FY17 Q1-Q3): before applications of standards abo
Slide 10: EBIT
EBIT 1,859.0 (JPY bn) 1,148.8 808.8 SVF segment Up 62% 236.4 53.4 Gain on spectrum license exchange 255.3 Sprint 238.4 140.5 115.3 Yahoo Japan SoftBank 610.9 640.0 segment Others New standards (FY18 Q1-Q3): after applications of IFRS 9 and IFRS 15 Previous standards (FY17 Q1-Q3): before applications
Slide 11: Net Income
Net Income (JPY bn) 1,538.4 Up 52% 1,014.9 FY17 FY18 Q1-Q3 Q1-Q3 Net income: net income to attributable to owners of the parent !9
Slide 12: SoftBank Vision Fund
SoftBank Vision Fund !10
Slide 13: Alibaba Local Services
+ Investment Committee approved companies + pipeline, etc. (19 companies) (Zuoyebang) Alibaba Local Services As of Feb. 6, 2019 Certain “SoftBank Vision Fund” investments described herein have not yet been acquired by SVF and are subject to pending regulatory approvals. There can be no assurance tha
Slide 14: Commitment Structure of SVF
Commitment Structure of SVF (As of Jan. 31, 2019) USD 98.6bn * Preferred Equity 7% fixed distribution USD 40.0bn Equity Performance-based USD 58.6bn SBG distribution USD 28.1bn (48%) Fixed distribution amounts are subject to the terms and conditions of an investment in this class of interests in SVF
Slide 15: NVIDIA Share Price
NVIDIA Share Price (Sep. 28, 2018) USD 281 (Dec. 31, 2018) USD 134 (Average acquisition cost per share) USD 105 Hedging mechanisms have special risks associated with them, including the possible bankruptcy, insolvency or default by the counterparty to the transaction and the illiquidity of the instr
Slide 16: NVIDIA Share Price
NVIDIA Share Price (Sep. 28, 2018) USD 281 (Without collar transaction) Valuation losses USD -4bn (Dec. 31, 2018) USD 134 (Average acquisition cost per share) USD 105 Dec. 1, Dec. 31, Past performance is not necessarily indicative of future results. Please refer to the footnote on the first page of
Slide 17: NVIDIA Share Price
NVIDIA Share Price (Sep. 28, 2018) USD 281 Quarter ended December 31, 2018 (With collar transaction) Losses (net) USD -1.1bn (Weighted average of floor = USD 218) Derivative gains USD +2.9bn (Dec. 31, 2018) USD 134 (Average acquisition cost per share) USD 105 Past performance is not necessarily indi
Slide 18: NVIDIA Share Price
NVIDIA Share Price (With collar transaction) Cumulative gains (net) + USD 2.8bn* (Weighted average of floor = USD 218) (Average acquisition cost per share) USD 105 * excluding financing cost Past performance is not necessarily indicative of future results. "Cumulative gains (net)" are provided solel
Slide 19: NVIDIA Investment Summary
NVIDIA Investment Summary USD 2.9bn Investment cost (August, 2017) Past performance is not necessarily indicative of future results. !17
Slide 20: NVIDIA Investment Summary
NVIDIA Investment Summary USD 2.9bn USD 1.7bn Margin loan USD 1.3bn Investment cost (August, 2017) Past performance is not necessarily indicative of future results. !18
Slide 21: NVIDIA Investment Summary
NVIDIA Investment Summary USD 2.9bn USD 1.7bn Margin loan USD 0.5bn Preferred Equity USD 0.7bn Equity Investment cost (August, 2017) Past performance is not necessarily indicative of future results. !19
Slide 22: NVIDIA Investment Summary
NVIDIA Investment Summary USD 5.5bn USD 1.7bn Margin loan Realized Gross Equity IRR USD 0.5bn Preferred Equity 824% * USD 2.9bn USD 1.7bn Secured cash early by setting floor price USD 3.3bn Equity USD 0.5bn Gross Equity IRR means the internal rate of return of Class A Equity Interests before taking
Slide 23: Exited Investments (SVF)
Exited Investments (SVF) Investment Cumulative Gross costs return (gross) Multiple * equity IRR [Equity] [Equity] USD 0.7bn USD 3.3bn 4.5x 824% (JPY 80.7bn) (JPY 362.4bn) USD 1.4bn USD 2.3bn 1.6x 58% (JPY 156.2bn) (JPY 252.1bn) Gross Equity IRR means the internal rate of return of Class A Equity Int
Slide 24: Gross Distribution from SVF
Gross Distribution from SVF (Cumulative as of Dec. 31, 2018) JPY 121bn (gross) JPY 99bn (gross) Total JPY 220bn (gross) NVIDIA: Partial realization as of December 31, 2018: investment was fully realized in January 2019, but proceeds from the January sale are not USD = JPY 110 reflect in the distribu
Slide 25: Shareholder Value
Shareholder Value !23
Slide 26: Enterprise Value
Enterprise Value Shareholder value Debt !24
Slide 27: Enterprise Value
Enterprise Value Shareholder value Debt !25
Slide 28: SBG Net Debt
• SBG = SoftBank Group Corp. • SBKK = SoftBank Corp. • Gross debt: Interest-bearing debt • Net debt: Net interest-bearing debt = Consolidated net interesting-bearing debt - Non-recourse net debt to SBG SBG Net Debt • Consolidated net interesting-bearing debt = Consolidated interest-bearing debt - Co
Slide 29: SBG Net Debt
• SBG = SoftBank Group Corp. • SBKK = SoftBank Corp. • Gross debt: Interest-bearing debt • Net debt: Net interest-bearing debt = Consolidated net interesting-bearing debt - Non-recourse net debt to SBG SBG Net Debt • Consolidated net interesting-bearing debt = Consolidated interest-bearing debt - Co
Slide 30: SBG Net Debt
• SBG = SoftBank Group Corp. • SBKK = SoftBank Corp. • Gross debt: Interest-bearing debt • Net debt: Net interest-bearing debt = Consolidated net interesting-bearing debt - Non-recourse net debt to SBG SBG Net Debt • Consolidated net interesting-bearing debt = Consolidated interest-bearing debt - Co
Slide 31: SBG Net Debt
• SBG = SoftBank Group Corp. • SBKK = SoftBank Corp. • Gross debt: Interest-bearing debt • Net debt: Net interest-bearing debt = Consolidated net interesting-bearing debt - Non-recourse net debt to SBG SBG Net Debt • Consolidated net interesting-bearing debt = Consolidated interest-bearing debt - Co
Slide 32: SBG Net Debt
• SBG = SoftBank Group Corp. • SBKK = SoftBank Corp. • Gross debt: Interest-bearing debt • Net debt: Net interest-bearing debt = Consolidated net interesting-bearing debt - Non-recourse net debt to SBG SBG Net Debt • Consolidated net interesting-bearing debt = Consolidated interest-bearing debt - Co
Slide 33: Enterprise Value
Enterprise Value Shareholder value Debt !31
Slide 34: Net debt JPY 4t
Net debt JPY 4t • Net debt: Net interest-bearing debt = Consolidated net interesting-bearing debt - Non-recourse net debt to SBG • Sprint: calculated by multiplying the share price of T-mobile US, Inc. by the exchange ratio: 0.10256 on the premise of a future merger • Arm: calculated based on the ac
Slide 35: Equity value of holdings JPY 25t
Net debt JPY 4t Equity value of SVF Others holdings JPY 12.5t JPY 4.2t JPY 2.6t JPY 2.7t JPY 2.7t JPY 0.6t JPY 0.3t JPY 25t • Net debt: Net interest-bearing debt = Consolidated net interesting-bearing debt - Non-recourse net debt to SBG • Sprint: calculated by multiplying the share price of T-mobile
Slide 36: Equity value of holdings and net debt
Net debt JPY 4t Equity value of SVF Others holdings JPY 12.5t JPY 4.2t JPY 2.6t JPY 2.7t JPY 2.7t JPY 0.6t JPY 0.3t JPY 25t Net debt Net debt Net debt JPY 3.0t JPY 3.7t JPY 0.2t • Net debt: Net interest-bearing debt = Consolidated net interesting-bearing debt - Non-recourse net debt to SBG • Sprint:
Slide 37: Non-recourse net debt to SBG
Net debt JPY 4t Equity value of SVF Others holdings JPY 12.5t JPY 4.2t JPY 2.6t JPY 2.7t JPY 2.7t JPY 0.6t JPY 0.3t JPY 25t Net debt Net debt Net debt JPY 3.0t JPY 3.7t JPY 0.2t Non-recourse net debt to SBG • Net debt: Net interest-bearing debt = Consolidated net interesting-bearing debt - Non-recou
Slide 38: Shareholder value JPY 21t
Net debt JPY 4t Equity value of SVF Others holdings JPY 12.5t JPY 4.2t JPY 2.6t JPY 2.7t JPY 2.7t JPY 0.6t JPY 0.3t JPY 25t Shareholder value JPY 21t • Net debt: Net interest-bearing debt = Consolidated net interesting-bearing debt - Non-recourse net debt to SBG • Sprint: calculated by multiplying t
Slide 39: − 9? !37
25 4 − 9? !37
Slide 40: Shareholder value vs market cap
• Shareholder value = Equity value of holdings - Net debt • For details, see “Definition and Calculation Method of SBG’s Sum-of-the-parts Valuation” 25 − 4 JPY 22t JPY 21t JPY 9t Shareholder value Market Cap. (as of Feb. 6) (as of Feb. 6) !38
Slide 41: Shareholder value per share vs share price
• Shareholder value = Equity value of holdings - Net debt • Shareholder value per share = Shareholder value / Shares issued • Shares issued: excluding treasury shares • For details, see “Definition and Calculation Method of SBG’s Sum-of-the-parts Valuation” JPY 20,121 JPY 8,462 Shareholder value Sha
Slide 42: Shareholder value per share vs share price
• Shareholder value = Equity value of holdings - Net debt • Shareholder value per share = Shareholder value / Shares issued • Shares issued: excluding treasury shares • For details, see “Definition and Calculation Method of SBG’s Sum-of-the-parts Valuation” JPY 20,121 JPY 8,462 Shareholder value Sha
Slide 43: Share Repurchase Plan
Share Repurchase Plan Total repurchase JPY 600 billionmaximum amount Total number of repurchasable 71.29 million shares (Treasury stocks are to be retired) ( 6.5% of the total number of shares issued as of December 31, 2018) shares Repurchase From February 7, 2019 to January 31, 2020 period *The tot
Slide 44: Use of SBKK IPO Proceeds
Use of SBKK IPO Proceeds IPO proceeds JPY 2.0t Growth investment Improving Shareholder return financial position Expected amount for investment JPY 700bn Debt repayment JPY 700bn Share repurchase JPY 600bn !42
Slide 45: LTV
• LTV = Net debt / Equity value of holdings • For details, see “Definition and Calculation Method of SBG’s Sum-of-the-parts Valuation” JPY 25t LTV 14% JPY 4t Equity value of Net debt holdings (as of Feb. 6) !43
Slide 46: Investors
Investors !44
Slide 47: Investors
Investors Cash flow focused !45
Slide 48: Investors
Investors Cash flow focused Algorithm !46
Slide 49: Investors
Investors Cash flow focused Vision Algorithm !47
Slide 50: SoftBank Group's Vision
SoftBank Group’s Vision !48
Slide 51: PC Internet Broadband Smartphone AI
PC Internet Broadband Smartphone AI Evolve along with paradigm shift !49
Slide 52: Which one would win?
Which one would win? !50
Slide 53: Fifth Avenue, New York
Fifth Avenue, New York 1900 !51
Slide 54: Fifth Avenue, New York
Fifth Avenue, New York 1900 1913 !52
Slide 55: Fifth Avenue, New York
Fifth Avenue, New York A I autonomous vehicle in 2035 !53
Slide 56: Past 30 years x 1m
CPU Data capacity Communication speed Past 30 years x 1m x 1m x 1m !54
Slide 57: Past 30 years x 1m
CPU / GPU Data capacity Communication speed Past 30 years x 1m x 1m x 1m Next 30 years x 1m x 1m x 1m (going forward) !55
Slide 58: Evolution in Next 30 Years
Evolution in Next 30 Years CPU & GPU Brain x 1m > AI !56
Slide 59: Biggest revolution in human history
AI Biggest revolution in human history !57
Slide 60: Value over Time
Value Agriculture / Fishery / Metals Time !58
Slide 61: Value over Time
Value Industrial / Financial Agriculture / Fishery / Metals Time !59
Slide 62: Value over Time
Value Internet Industrial / Financial Agriculture / Fishery / Metals Time !60
Slide 63: Value over Time
Value AI Internet Industrial / Financial Agriculture / Fishery / Metals 1995 2019 Time 25 years !61
Slide 64: All industries will be re-defined
AI All industries will be re-defined !62
Slide 65: Cluster of No.1 AI strategy
Contents Dynamic personalization pricing Aim to be: Optimize Cluster of Selection of No.1 construction new base location process AI strategy Optimized Personalized recommendation apps The investments presented herein are solely for illustrative purposes and are not a complete list of investments hel
Slide 66: Information Revolution Happiness for everyone
Information Revolution Happiness for everyone !64
Slide 67: SoftBank
SoftBank
Slide 68: Definition and Calculation Method of SBG's Sum-of-the-parts Valuation
Definition and Calculation Method of SBG’s Sum-of-the-parts Valuation i. Net debt • Net debt = Net interest-bearing debt = Consolidated net interesting-bearing debt - Non-recourse net debt to SBG • Consolidated net interesting-bearing debt = Consolidated interest-bearing debt - Consolidated cash pos