Earnings Results for Q3 FY2023

Earnings Results for Q3 FY2023 ― February 8, 2024

SoftBank Group Corp. announced on February 8, 2024 its earnings results for the third quarter of the fiscal year ending March 31, 2024.

Webcast

Full-length (1:22:28)

7-minute highlight video is also available.

[Short Video] SoftBank Group Earnings : Q3 FY2023 by Yoshimitsu Goto, Board Director, Corporate Officer, Senior Vice President, CFO & CISO

Earnings Highlights (Nine-month period ended December 31, 2023)

1. Listing of Arm on the Nasdaq Global Select Market

  1. Arm was listed on the Nasdaq Global Select Market on September 14, 2023. In the IPO, a wholly owned subsidiary of the Company disposed of 102,500,000 American depositary shares (“ADSs”), representing 10% of Arm’s outstanding ordinary shares,*1 and received proceeds of $5.12 billion.
  2. No gain on the disposal is recorded in the consolidated statement of profit or loss as Arm continues to be a subsidiary of the Company after the disposal. However, in the consolidated statement of financial position, ¥674.4 billion ($4.65 billion), which represents the gain on disposal, was recorded as capital surplus.

2. Acquisition of T-Mobile 48.8 million shares for no additional consideration upon satisfaction of contingent consideration condition

The Company acquired 48.8 million shares of T-Mobile stock equivalent to $7.74 billion (¥1.1 trillion) for no additional consideration on December 28, 2023, following the satisfaction of the contingent consideration condition on December 22, 2023. This was part of the consideration the Company received for the merger between T-Mobile US and the Company’s then-U.S. subsidiary Sprint, which closed on April 1, 2020.

3. Results highlights

¥538.9 billion investment loss (¥1,361.2 billion loss for the same period of the previous fiscal year)

  1. ¥583.4 billion investment loss at Investment Business of Holding Companies
  • Derivative gain of ¥225.4 billion on investments, while realized and unrealized valuation losses on Alibaba shares totaled ¥943.0 billion
    Note: The ¥943.0 billion realized and unrealized valuation losses on Alibaba shares were offset by a derivative gain of ¥1,204.7 billion, which arose from prepaid forward contracts using Alibaba shares and is recorded separately as “derivative gain (excluding gain or loss on investments).”
  1. ¥52.0 billion investment loss at SoftBank Vision Funds (excluding gains associated with SVF’s investments in the Company’s subsidiaries)
    Note: The SoftBank Vision Funds segment recorded ¥781.9 billion gain on investments. This included gains associated with SVF’s investments in Arm and other subsidiaries of the Company.
  • An investment gain of ¥531.3 billion was recorded for the third quarter, driven by higher share prices of public portfolio companies*2 and an increase in the fair value of ByteDance due to its strong performance. However, the period nevertheless saw an investment loss of ¥52.0 billion, primarily resulting from markdowns of weaker-performing private portfolio companies.*2

¥264.1 billion gain before income tax (improvement of ¥554.1 billion YoY)

reflecting the recordings of:

  1. Finance cost of ¥426.8 billion
  2. Foreign exchange loss of ¥308.2 billion due to the impact of the weaker yen. This was a result of net excess of U.S. dollar-denominated liabilities (net) mainly at SBG over its U.S. dollar-denominated cash and cash equivalents and loans receivable
  3. Derivative gain (excluding gain or loss on investments) of ¥1,180.3 billion, arising from a gain relating to prepaid forward contracts using Alibaba shares following a fall in Alibaba’s share price, which offset the previously mentioned realized and unrealized valuation losses on these shares

¥458.7 billion net loss attributable to owners of the parent (improvement of ¥453.8 billion YoY)

reflecting the recordings of:

  1. Income tax of ¥383.8 billion
  2. Net income attributable to non-controlling interests of ¥339.0 billion

4. Balancing defense and offense

LTV*3 remained nearly unchanged from the previous fiscal year-end as a result of ongoing monetization initiatives

  1. Raised $4.39 billion through prepaid forward contracts using Alibaba shares
  2. Received proceeds of $5.12 billion through the disposal of 10% of Arm’s outstanding shares in its IPO
  3. Received proceeds totaling $3.93 billion from sales of investments by SVF*4

Expanded investments

  1. $1.45 billion for acquisition of investments by SVF*4
  2. ¥309.2 billion primarily for strategic investments by SBG and its wholly owned subsidiaries*5

5. SVF

Gross performance since inception was $16.7 billion in gain for SVF1 and $19.0 billion in loss for SVF2.*6

6. Completed replacement of USD-denominated NC6 undated hybrid notes

In April 2023, the Company issued domestic hybrid bonds totaling ¥222.0 billion. This was followed by a hybrid loan*7 of ¥53.1 billion incepted in May 2023. With these funds, the Company completed the replacement of USD-denominated NC6 undated hybrid notes ($2.0 billion), which had their first voluntary call date in July 2023. Additionally, in September 2023, the Company replaced domestic hybrid bonds (¥15.4 billion), coinciding with their first voluntary call date in the same month.

7. Completion of the intragroup reorganization involving Z Holdings and its core wholly owned subsidiaries, primarily LINE and Yahoo Japan

As of October 1, 2023, Z Holdings successfully completed the scheduled intragroup reorganization procedures, including a merger primarily among the company and its core wholly owned subsidiaries, LINE and Yahoo Japan, and changed its trade name to LY Corporation. The revised organizational structure, with a further emphasis on products, is expected to accelerate synergy expansion through business integration.

  1. The calculation is based on the 1,025,234,000 company shares issued and outstanding on September 30, 2023.

  2. Public portfolio companies are shares traded on stock exchanges or over-the-counter markets. Private portfolio companies are those that do not fall under the category of public portfolio companies. The same applies hereinafter.

  3. Loan-to-Value (LTV) refers to the ratio of liabilities to holding assets, calculated by dividing the adjusted net interest-bearing debt by the equity value of holdings. Both the equity value of holdings and adjusted net interest-bearing debt exclude amounts to be settled at maturity or borrowings associated with asset-backed finance. In computing the adjusted net interest-bearing debt, the calculation omits interest-bearing debt and cash and cash equivalents, etc., attributable to entities managed on a self-financing basis, such as SoftBank Corp. (including its subsidiaries such as LY Corporation and PayPay Corporation), SVF1, SVF2, LatAm Funds, and Arm. In addition, interest-bearing debt and cash and cash equivalents, etc. attributable to SB Northstar are excluded, with the exception of certain portions of interest-bearing debt, cash and cash equivalents, and bond investments.

  4. The amounts recorded in the condensed interim consolidated statement of cash flows

  5. The amount comprises the investment outlay by SBG and its primary wholly owned subsidiaries (excluding investments in U.S. Treasury Bonds), as accounted for under “Acquisition of investments” in the condensed interim consolidated statements of cash flows, combined with the amount paid to third-party shareholders in connection with the subsidiary acquisitions of Berkshire Grey, Inc. in July 2023 and Balyo SA in October 2023, net of cash and cash equivalents held by these companies.

  6. Gross amounts before deductions, such as third-party interests and taxes

  7. The hybrid loan is eligible for 50% equity treatment for the drawn down amount by Japan Credit Rating Agency, Ltd. and S&P Global Ratings Japan Inc.

Materials&News

Q1Q2Q3Q4
FY2023Aug. 8, 2023Nov. 9, 2023Feb. 8, 2024
Webcast VideoWatch video VideoWatch video VideoWatch video
CFO Reflections VideoWatch video VideoWatch video VideoWatch video
Highlights VideoWatch video VideoWatch video VideoWatch video
Presentation
Quarterly Results
Data Sheet
FY2022Aug. 8, 2022Nov. 11, 2022Feb. 7, 2023May 11, 2023
Webcast VideoWatch video VideoWatch video VideoWatch video VideoWatch video
CEO/CFO Reflections VideoWatch video VideoWatch video
Highlights VideoWatch video VideoWatch video VideoWatch video VideoWatch video
Presentation
Quarterly Results
Data Sheet

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