Softbank Group Corp

Thank you very much for waiting, everyone. Now, we would like to start the SoftBank Group Corp Earnings Results Announcement for six-month period ended September 30th, 2024. First of all, I would like to introduce today's participants. From left, we have Mr. Yoshimitsu Goto, Board Director, NCFO, Ms. Kazuko Kimiwada, Corporate Officer, Senior Vice President and Help Accounting Unit. Mr. Navneet Govo, CFO, SV Investment Advisors and SV Global Advisors. And Mr. Ian Thornton, IR Vice President, ARM. Today's announcement is live broadcast over internet. Now, I would like to invite Yoshimitsu Goto to present you the earnings results and business overview. Mr. Goto, please. Thank you for the introduction. This is Goto speaking. Thank you very much for joining during your busy schedule. Here, we would like to announce the numbers, which actually I'm quite happy with, with good numbers, good results. The one thing that I couldn't achieve this term was at Hawkes. could not win the Japan Championship, which is one big leftover. that's something that we need to do, challenge again for the next year. So there is no reason for the loss. So I believe that we need to review once again and do it again. Actually, the earnings is not the lose, actually win. And the win, there is no, there is a reason for win as well. So I would like to explain why this time for the good numbers. Start with highlights. Net income. was over 1 trillion yen, mainly driven by good performance of investments, which has been challenge in the past two years, which is a vision fund, made a good performance this quarter. And also T-Mobile share price is doing pretty good. So as a result, that made quite a good contribution to the earnings results this time. Net asset value, which is actually our enterprise value itself of our company, remained high at 29 trillion yen at the end of September. After then, market is doing much even better so that that brings us even better results for the latest number-wise. Vision Fund recorded 610 billion yen as an investment gain and also posting cumulative gains, which is another kind of highlights in the symbolic message to the market. And performance also continues to excel. And as a result, we are able to maintain the very robust and stable finance, financials, and also maintain ample cash reserves, which will enable us to further AI investments. So I'd like to go into a little bit of more details, starting with consolidated results. I mentioned net income for the first half exceeding 1 trillion yen now compared to the year ago a first half of 2023 actually is increased by 2.4 trillion yen and investment gains was 2.6 trillion yen so that compared to the last year first half 3.6 trillion yen increase the breakdown of these numbers will be followed by next pages here the investments gain and loss and net income quarterly basis two trillion yen and over of the gain on investments for the quarterly basis and if you see more in details 2 trillion yen gain in investments, mainly due to the blue portion, 567 billion yen from the Vision Fund. In the green bar, inside of it, you see the dotted lines, which is the T-Mobile contribution by 387 billion yen. So total of the Vision Fund and the T-Mobile, over 1 trillion yen of the performance contribution. Remainings, you may wonder, is actually from the Alibaba share transaction. This is financially, it's all completed financing. And as a scheme, we have used the prepaid forward contracts As a result, we set the share price and agreed the future sales and get the money in advance. And because there are some share remain for before the settlement and actually have a market variations and evaluation gain was about 1 trillion yen or so. but that also been settled. Therefore, this is the kind of adjustments. So the sales has already been completed, and later on, even that share price increase, but still, that does not impact to the cash settlements. Therefore, accounting-wise, evaluation increase. However, that's been already done. So that's gonna be adjusted through the derivative transaction. In total, it's about 1 trillion yen. However, at the same time, we see the forex movements. And because of the forex movements, we have about the difference of 400 billion yen. So green portion is the gain on Alibaba shares. But below, 1.4 trillion yen with the 400 billion yen of the forex impacts. And that also needs to be considered altogether. So put 2 trillion yen of the positive, you can exclude the developer settlements. So maybe 1 trillion yen of the vision funding at T-Mobile is a big contributor for the performance this time. But even with that, compared to the first quarter or the quarter on for the 2023, actually we are making quite a steady growth, which is a very happy result for us. and key indicators. Three indicators that we see as the key indicators, net asset value, loan-to-value, and also cash position. Net asset value, as you saw on the previous pages, ¥29 trillion at the end of September. Loan-to-value, 12.5%. Cash position, ¥3.8 trillion. Not only net asset value, but the loan-to-value and cash position that was also contributed by the good market performance And the latest wise, loan to value probably less than 12%, somewhere around 11%. And cash position, because of the Forex, actually that we are exceeding 4 trillion as of latest number wise. So it is positively moving as a matter of fact. Net asset value see slight decrease mainly because SoftBank Corp decreased slightly. Instead, we see the increase in T-mobiles and Vision Fund. And also, we have a Forex impact, so we have some kind of a bounce back. Starting from 1998, this is a history of Net Asset value of ours. 29 trillion. I believe that that gives you the good latest view on SoftBank Group.

About the T-Mobile that I touched upon some time earlier, it was 21 when we acquired Sprint. we acquired Sprint in 2023 and since then they were turning around the business and in 2020 they were merged with T-Mobile and back then the stock price was $82 but at the last day of last week it went up to a historic high of $238 or three times bigger than the one, three, and we emerged with T-Mobile and Sprint. Since the merger compared to other carriers in terms of index, like AT&T, Verizon in the U.S., and Tynemobile, which was the number one in the world, and NASDAQ, which is a tech-related index, if you compared with them, T-Mobile outperform China Mobile, AT&T, and Verizon. Even against Nasdaq, T-Mobile is way ahead. So looking at the stock price or market cap, if you take a look at on the left-hand side, when we acquired Sprint, 2012, actually, back then, This tiny, tiny bar was T-Mobile plus print, 22 billion, so far behind Verizon and AT&T. As of end of September, however, T-Mobile exceeded not only AT&T, Verizon, but also China Mobile, which once was number one in the world. Where this growth come from? Free cash flow. This pink is T-Mobile. As you can see, the free cash flow is building up steadily. On the other hand, Verizon and AT&T, in the last four or five years, they are on the declining trend. So it's very clear contrast between T-Mobile and their competitors in the U.S. So from our investment performance perspective, equity, we put about 0.4 trillion and 2.1 trillion was leveraged and borrowing was already repaid and equity value grew from 0.4 to 3.9 trillion and MOIC was almost nine excuse me ten times and the equity IRR 26 percent so performance was clearly good We reminded you on this because T-Mobile contributed a lot to our great performance for this term. And still some people believe SoftBank failed in the Sprint transaction, but probably it's our fault not being able to communicate well with the community. But again, we just wanted to show again, our investment in Sprint turned out to be great. Talking about investment of SoftBank, Alibaba, ARM, and Sprint were the major investments we made so far. Alibaba, we invested a little bit in the beginning. So MOIC is tremendous, like 1,340 times, but that's reality. of 3 billion investment, 2.3 was equity, and MOIC was 8, and ARRA is almost 30%, and we can still expect upside because ARRA will play a key role in AI development. about Forex which has been fluctuating. In the first half of this fiscal year, it was 151 yen per dollar as of March end, and as of end of September, 142 yen. At this level, the forex change had a negative impact on NAV by 1.9 trillion and also negative impact on equity by 1.3 trillion negative but on the other hand positive impact on net income consolidated net income by 0.3 trillion yen And now that Mr. Trump was elected as the president and the rate is around 153 yen per dollar recently. So again, market condition changes as forex changes so looking at that kind of changes will be flexible in terms of what kind of actions we should take about the cash position for this quarter arm listed last year and at that time we purchased a vision fund holding and in this term the payment took place so investment related including installments for our share transaction consideration was a driver of reduction of the cash position. On the other hand, we did debt financing. So from a cash flow perspective, we saw a positive number. But all in all, net cash position as of end of September was 3.8 trillion. But more recently, it should exceed over 4 trillion, thanks to the better market condition. And always keeping two years worth of bond of redemption is the commitment we make and we are actually making the commitment in fact not only two years but also three four years of bond of redemption can be possible at this cash position LTV 12.5%, very stable and low level. Recently, even lower than 11%, so even much safer. Looking back the history of cash position, this is the trend. Constantly, we have kept around 4 trillion. Now, shifting gear to SPF.

So, quarterly-based gain and loss on investments. This quarter, 4 billion gain in this quarter, which is very good number, this combined vision funds numbers. In the past few years, there are big ups and big downs. But when we see the big downs, we always tried the very conservative marks or valuations. And I believe based on such a history, I believe that we were able to make a good result. So we would like to maintain our very conservative view and at the same time share such numbers and results. First, there are two – Vision Fund 1 and 2 being started, and on your left-hand side, the navy one is the Vision Fund 1 results. Mainly public shares and also the private shares are making a good momentum. And actually, the highlights this quarter is on your right-hand side, Vision Fund 2, because the investment started about three years ago, and the valuation for the private equity was relatively high back then. And also, after then, market kind of sluggished. Therefore, that has been impacted to the number. and still the lots of public private securities in the Vision Fund too, but this time that we see the good improvements and also the inside of the portfolio, we've been seeing lots of good potentials and that we believe is making a good work to boost overall results for the Vision Fund too. And here's some highlights for the Vision Fund. One, portfolio companies, For the public company wise coupon, fair value was 8.6 billion. And along with the increasing in valuation, we have a 1.2 billion unrealized gain, valuation gain is recorded. And ride-sharing company Didi in China, it's like an Uber type of company, and they have withdrawn from the U.S. market once, but still the transaction is ongoing, and the fare value is now 4.6, and this is also making a good growth. These two are the kind of major highlights for the Vision Fund 1, but also including the other public portfolio companies this quarter, 2.8 billion in total of the public companies. Vision Fund 2, now that we see IPOs from the portfolio companies in Vision Fund 2 more and more, And this time, this quarter, especially the good contributor was the OLA Electric Crystal Pi. There are also other public companies, but it hasn't spent too much time after the IPO, so that's not making a big contribution to the result. But at the same time, we do have a good pipeline. The private companies in total is a little bit shy of 1 billion, and that was another good contributor for this time result. So with the small efforts by the each portfolio companies that comes down up to this number, if you go inside, you see that Revolut or Klarna, they are making a good growth now. For the details of Vision Fund 1 and Vision Fund 2, we will be able to share, as we have Navneet in person, so that he will be able to give you more colors, obviously, at the investor briefing after this announcement. And here, the gain and loss on investment cumulative here, It's turned to positive for the first time in nine quarters. I believe that is kind of a big message for us this time because In the past two years or so, we've been working hard, but also we're not able to bring to the positive number. But now that we are able to come to this close, of course, we may see a volatility ahead. But now that we're seeing more and more public companies, public portfolios in Vision Fund 1 and Vision Fund 2 also start seeing More and more companies entering into the late-stage portfolio or companies are increasing, so that's something that we are very much expecting in the future. Vision Fund 1, cumulative investment return recap. On your left-hand side is the investment cost because Vision Fund 1 already finished its investment period. So 89.5, no change between June and September end. And the current cumulative investment return on your right-hand side, those two bars, far right is the end of September number, $112 billion. Three months before, so like June end, Actually, you see the good growth from June end to September end. Green portion is the already exited and blue. We're seeing improvements in public companies. Those are the companies that we still hold. And dark blue in the very bottom, those are the private companies. Here in the private companies, we do still have a good attractive companies such as ByteDance, Fanatics. So those are also, we have a good expectations for the valuations. And not only that, we have some others as well. So now that we are reaching to 112 billion, So we believe we start seeing a good kind of the results for the return for the Vision Fund 1 now. This fund life will be 2029, and also they have a two-year extension option too. Vision Fund 2, investment costs on your left-hand side. 53.6 billion investments so far and still having a bit difficult quarters in the past for the performance, but this September end, we were able to achieve 32.6 billion return. Compared to Vision Fund 1, it still have a good proportion of the investment portfolio is still the private companies. So we would like to keep a good eye on them. And of course, in addition to that, that we would like to continuously have new investment activities. So that's gonna be also another important factor for Vision Fund 2 performance. And let me also go into a little bit more details in the Vision Fund 2 portfolio companies. And this is the public listings and the pipelines. We have 53 listings so far since inception. And also for this second quarter, we had two IPOs, First Cry and Ola Electric. On your right-hand side, late-stage portfolio, they, in a good growth, they can start seeing for all the preparations. And we're seeing the $34 billion for the late-stage portfolio by Dance Fanatics or Ola, which is a parent company for Ola Electric that went IPO this time. And on your right-hand side, Vision Fund 2 and Latam Fund. Teipei in Japan is also the good expectation we have. And Suigi, which is also close to the IPO. And OpenAI, we made investments from Vision Fund 2 this time, which I will touch on later page. And two companies that went public this time for this quarter. This is from a portfolio company of Vision Fund 2, FastCry. and Ola Electric. Both are the IPO in Indian market. Fast Cry, as you can imagine from the name of the company, this is the online store for newborn and baby and kids products. And on your right hand side, Ola Electric, this manufactures electric scooters and provides products globally. So they got scooters, so-called. That's the main products for this company and well received in the market. And MOIC is also very stable now. In Vision Fund 2, also making new investment activities in very selective manner and adding one by one. One of which is Glean, that provides best-in-class search functionality and higher user-friendly AI agents for enterprise. Also, Poolside, which supports developers in improving work efficiency by building generative AI tools for software development and coding. And OpenAI, which is well-known by you in the market, I believe.

Talking about OpenAI, let me share with you some numbers that we can show you the investment by SVF2 was 500 million it was the round in September OpenAI's total round size was 6.6 billion for that round Post money evaluation of OpenAI was expected at 157 billion. The tremendous evaluation as a public entity, but they have a great business model and technology, so it's not surprise. Revenue. Expecting 131% increase year-on-year to 370 billion. Business overview. As you can see, weekly active users, average monthly website visit, ChatGPT plus subscribers, weekly active users reached 250 million, average monthly website visit, 1.7 billion, and ChatGPT plus subscribers, 11 million. So they are on a strong momentum toward the realization of AGI that benefits all of humanity In fact, that's why we made a decision to invest in the company Of course, there are competitors, but if you compare with them more clearly It shows OpenAI's ability and capability. Monthly website visits OpenAI's monthly average was 1.7 billion, but as for September 2024, they hit 3.7 billion. At the very bottom, their competitors like Meta, Cloud, and Gemini, those hyperscalers are offering GenAI-powered services, but OpenAI is far, far ahead of them. They've got a great market share and I believe that OpenAI will expand the market with its technology and business model So we will look and see how OpenAI goes with high expectations And let me share with you a slight change of the organization. Rajiv Mishra will step down as co-CEO and Alex Clavell will become sole CEO of SBIA and SBGA. Rajiv, as a member of SoftBank family, should be able to contribute to us a lot and of course Rajiv is a great friend of Masa-san and when Rajiv was an investment banker I got to know him and I have been working with him for over 20 years so he is a comrade and I don't speak a good English but as a non-Japanese friend he is one of the great non-Japanese friends of mine and I want to learn continuously from him and appreciate his contribution so far now change a the subject to arm they keep a great performance quarterly revenue is shown here $844 million. It exceeds upper thresholds of $830 million of FY24 second quarter guidance, which was already announced. And for the first half revenue, compared to the last quarter and the quarter before that, Year-on-year 20% increase was recorded for this half year and quarterly non-GAAP operating income is shown here now 326 million dollars that's above analyst consensus on quarterly basis it looks a little bit down from the quarter to last year but half basis they recorded 18% year-on-year increase so great performance as usual Investors, analysts, the media may have different view on that performance. For the short term, Arm is one of the volatile stocks, but we are looking at the arms meet long term growth potential, and we hope to help them to increase their value and their corporate value at the moment and their operational excellency and performance, we are happy with them at the moment. And ARM announced guidance for the revenue to $920 million to $970 million or 12% to 18% year-on-year growth. For the full year, FY2024, the announced guidance was plus 18% to plus 27%. So those numbers are for your reference. Maybe I should share with you some of the topics that ARM had in the first half of this fiscal year. Meta's LLM, LLM, excuse me. I think this is a very significant event. Meta developed a new LLM, LLM, LLM 3.2 LLM was released and they optimized this to run on ARM-based CPU. This Llama 3.2 has a high scalability and delivers high performance. Again, this is optimized for ARM CPUs. And in fact, it delivers up to five times better performance and more enhanced algorithms. AI algorithms not only can run on cloud, but also can run on edge device like mobile. Since performance is great, speed is better and has a greater energy efficiency so I think that's a great product looking back one year post IPO obviously they have strong financials on the left hand side as you can see First half of royalty revenue was up 20% year-on-year. And license revenue significantly exceeds the forecast made at the IPO. In the middle column, it's talking about technology. They developed and deployed new technology. ARMv9 contributes 25% of royalty revenue not only mobile but also data centers by major hyperscalers are running on ARMv9 v9 and computer service system is applicable not only to mobile but also other diverse applications like automobile data center and pc by utilizing css or compute subsystems users should be able to reduce cost and time to market And I believe that Arm is contributing a lot to the end users. And on the right-hand side, as you can see, Arm provides a positive evaluation from the market. Share price rise around three times post IPO. In the last one year, volatility is clear. Sometimes share price 140, 50, 80, but nonetheless, share price grew three times post-IPO. So, again, we are happy with that great performance. And now ARM is included in NASDAQ 100 and SOX. I'm sure that that should help stabilizing ARM's performance going forward.

Last part is the financial strategy. in the previous year end that we share with you the financial strategy and basically no change so far. On your right hand side, you see one, two and three loan to value, bond redemption two year worth. These are the financial policy that we have. So to check our soundness of our financials. These are the kind of easy-to-understand type of disciplines that we are keeping in our company. And that is going to remain the same. But on your left-hand side, in the past one year, there are many changes in the environment and market. We flexibly address those changes, and at the same time, adhering to financial policies. And at the same time, we like to keep building trust relationship with stakeholders so that we'll be able to keep those financial policies So equity market and credit market, we have a relationship with them and globally or domestically that we have so many stakeholders for our company and for all the stake, we would like to live up to the expectations of those respective stakeholders and also be good accountabilities for our company's current and also the future So keep those in mind that we would like to continuously communicate with the market and the stakeholders. As an investment company, it's also important how we're going to use our cash capital and the capital allocation. should we use for the new growth or should we use it for the balance sheet or should we use it for the shareholders? We try to pursue the best mix of those factors is our main mission. Having said that, I believe the most important thing is the growth investments for the future net asset value expansion for the future growth of the company. Of course, we haven't made any big investments so far in the past few years. However, we always try to be prepared for the opportunities, and there will be. a time of full-fledged AI and what's the agenda we should be looking for and what are the companies and entrepreneurs we should be investing in, all the companies, people, that's something that we would like to look for so that we will be able to support the good growth of the company in the future. As I mentioned, capital allocation, how are we going to use the use of proceeds? This is a kind of a simple chart that I can share for the capital allocation and where the money come from as an investment company. In principle, we have return from investments and that recycled to new investments. But the one note is that this timing for the investments and monetizing the asset of the best timing never matches. If you have a rule to use monetized money, for the new investment activities, then you always have to monetize in advance. And if you are not monetized, you will lose opportunity. And I believe leveraged finance can bridge those two difference of the best timing. So by having the good leveraged data capacity, we'll be able to take all the opportunities we may have. We would like to have a good health soundness of the financials for the monetizations, and at the same time, have the capability for leveraging debt capacity. And the return or redemption will come from the monetization of the assets. So opportunities for new investment activity should not be missed. and try to have a structure, the best scheme for the monetization. And at the same time, we would like to increase the asset value. And once we have monetization, we'll be able to think about more improvement in balance sheets or the shareholders return. So for the shareholder return can be a return to equity investor as well as credit investor, both important for us. So for the equity investor, buyback or those are the scheme we can think of, but for the credit investor, improving a balance sheet and also having more possibilities, a good room for the repayments, that's gonna be important factor for the credit investor. Of course, value of the loan, the value of the debt needs to be also improved. Then that can be a good value for the credit investors. So that also means that improving our credit. So that is kind of near the equals to our improvement of the balance sheet. So those three factor is a kind of a one set. And I would like to seek for the best balance of that. Under such circumstance, first six months, first half of the 2024, it's about 2 billion each for the investment amount. That's something within our expectation. So last year, third quarter and fourth quarter was too small probably if we look back. And we have a three-month period, but the investment never comes at the same time for the decision-making and the investment execution itself. It has a time difference, of course. So if you think about that, it may not make sense to just compare the quarterly basis. So you may want to see in the annual basis. That may be probably better to understand how the company is moving. But just for your reference, this is the actual 2 billion each for the investment amount so far in the first half of the 2024. And also mentioned in the previous announcements that for the beginning of this term, We had a big drop in share price and we had immediate response with the buyback announcements. So the maximum of the 500 billion yen and up to October, we have made the progress of the 35%. So 174 billion yen so far. So we have a one year term. So I think we have a good progress so far. So as a summary, once again, as you saw in the earlier pages, number-wise, I believe we were able to announce a good number for you this quarter. As a group-wide effort, we are heading towards AI era, and what can we do? What kind of role can we play? And in AI era, What kind of changes are we going to see, and what can we do for those changes? Arm as a center, AI chip, business models, developments is one, and also many frontiers of generative AIs. needing our data center and the electricity for the further development of the business. And I believe to promote the AI business, data center can be another agenda for us. And as you may recall, we've been working on the robotics, starting with Pepper, you may recall that. And with that robotics technology, now that we see the more and more use cases for the robotics, and that is something that we would like to continuously invest in through Vision Fund, that we've been already making an investment in robotics. And I think there are many potential good companies and businesses around us our leader not yet been motivated to come back to the stage on the earnings, but he comes up to the stage time to time. The latest one was the SoftBank Grow 2024 as a keynote speaker. And he made a comment saying that the AGI will be realized within two, three years, ASI to within 10 years. So he shared that his concept or his ideas regarding AGI and ASI. These timelines, of course, we have these numbers based on many assumptions and hypotheses. It may change, however, still we believe that that time will come for sure, and that's kind of unavoidable results. And in his presentation, he mentioned that ASI will evolve into super wisdom. I know there are many opinions when it comes to the risks or negative factor, but also we believe that it will contribute to the happiness of all human beings. And we need to continuously make an effort onto that. And these are the slides that he used at the SoftBank World and how we going to kind of evolve going forward. You see the slide in Martha's photo. On Martha's photo, there are four boxes. Information comes to knowledge, and that will become intellect, and that will become intelligence. So that's a kind of a process that AI will encourage the world to evolve. And as you see on your far, ultimately on your right, AI will kind of expand like a big band, and intellect to intelligence, and many more. Evolution, there will be hurdles, there will be afflictions, but still, that will come along with the happiness for human being. That's something that we are hoping and aiming at. And with that, we believe AI we'll be able to have a good harmony with humanity. Not only Masa, but the group overall, group-wide, we share the same vision and concept and we do our own job. What can we do in the AI era? So always keep the agenda in mind and try to improve our enterprise value. So last slide is always like a big way of ocean and we have boats or we walking around, but now that we seeing some summits there, but still far away. How can we come close to the summit? We don't know how we're gonna climb yet, but there is not only one way to climb there. There may be many ways we can try and error and try to achieve. We would like to become the one companies out of many to achieve the top of the mountain and try to improve our enterprise body at the same time. And, for that progress of this climbing of the mountain that I would like to share with you on a quarterly basis going forward. That is all from me for my presentation. Thank you very much, and I will be happy to take any questions after this.

Now we'd like to start questions and answers session. First, we'd like to take questions from the floor. Please wait for the microphone and start with your name and affiliation. For those who are on Zoom, please press raise hand button and wait for your name to be called. And please refrain from connecting to other live stream to avoid any echoing. Again, you can start pressing raise hand button now and wait until your name is called. If you wish to withdraw your question, please press lower hand button. If you access to Japanese Zoom, please ask questions in Japanese. We'd like to take up to two questions per person so that we can take questions from as many people as possible. Now from the floor. Thank you, MJ from Bloomberg. I have two questions. First, Rajiv-san, about Rajiv-san. Going forward, what kind of role Rajiv-san will play in SoftBank? Or Rajiv-san's role in SoftBank is over? That's first question. And second is about investment in OpenAI. Could you give us a background why you decided to invest now and why not a group but buy Vision Fund 2?

And if possible, on Vision Fund's investment strategy. 500 million seems like a big sum among the recent investments from the Vision Fund too. So if we could get an explanation a bit more about the Vision Fund strategy, that'd be great. Thank you.

Thank you very much. First question I will take and maybe I'm going to ask Navini to add about Rajiv. His key role is over as announced. He himself takes a lead in managing a fund, and I'm sure that he will focus on that management. What's that? One IM? Yes, I'm sure he is focusing on running his own fund. but does that mean complete goodbye to Rajiv? I don't think so. I think we're gonna keep communicating with him in some way, and I'm sure he's gonna visit Japan from time to time. I will keep getting in touch with him. But as a management team, for example, that kind of relationship and role is over. About OpenAI, So they invited potential investors and they created opportunity. And this timing, of course, we have tremendous interest in them and we have close communication with the management. And maybe it'll be great if timing was earlier, but I think still that round was great charming. And about Vision Fund portfolio, Navinil, would you like to add some color?

Sure. Thank you, MJ, for your question. In terms of our investment strategy in Vision Fund 2, we're very much focused on companies that are AI-leading companies, whether they're product-led or leveraging AI. And our criteria is four key things. We look at the quality of the AI tech stack. Basically, the key is transformative companies that are driving innovation and value creation through artificial intelligence. The second is product market fit and scalability. So having a good product does not necessarily mean having product market fit. Product not only meets market needs, but also needs to have significant potential for growth, scale, and impact. The third thing is unit economics. So, it's more than just margins, but overall financial health, sustainable, scalable business model that promises long-term profitability and success. And the fourth criteria is execution excellence. So consistent, continuous execution to ensure the efficient and effective translation of vision into tangible business results.

You have another question about the vision fund? Open AI, yes. Why vision fund and not a SoftBank group? So again, OpenAI invited potential investors and that was the round in September and obviously OpenAI has a roadmap and they made it clear from our perspective Again, it was just a minority investment and also it's clear about their roadmap going forward. That's why I think it was good to have a fund to invest, not group. Any other questions?

Person in the very front row, please. My name is Shikata from Nikkei newspaper. I also like to ask about open AI. So even from the fund, but I think there is a meaning to have it, even if it's a minority, especially when it comes to AI strategy. It may be easier for you to create a synergy because you'll be able to catch the good trend of the latest AI information. So with that, can you talk about AI investments? So, of course, this is a company leading the world with the generative AI. So this investment is going to be making even more robust in terms of relationship with them. And even after the investments or before investments, we are continuously keeping the good communication with them so that we can discuss the potentials for the future business that will be also important for us. And there are many to learn from them in terms of the AI trend in the world that can be a good learning for us. Their technology, their future visions can be also the good for learning for us, for our development of the business. At the same time, the top of the company between those two companies are very close to each other as well. So we are very much expecting that that can create a good synergies.

Thank you. Any other questions from the floor? Oh no, from Yomiuri Newspaper. for the term in business performance. You mentioned that you are happy and beginning to see the summit. So I think this is the most positive presentation of the earning results since you started doing that or leading that earnings announcement. So I just wanted to ask you your position for the future investment Masa-san showed interest in investment the size of several trillion yen, so backed by the great performance. So you are more aggressive or more offensive mode in terms of future investment. It's not just because the great performance. What does great performance mean? That means that our financial stability is even more, even much stronger. We talked about capital allocation in my presentation, and the more powerful the financial stability gets, and the bigger opportunity that we can tap into, I'm not saying that we see a big opportunity now but now we are more ready than before to tap into new opportunities we are not gonna do all at once we are going to be opportunistic and rather than a size we want to see whether a deal or potential deal is great or not for example investment in open AI the size big or not from our perspective size wise it was not a huge 500 million but as a deal as a significance it was a big deal and again we are fully ready and we are ready to tap into new opportunity having said that the financial policy is solid because you may start asking how much you spend for investment We will invest within a range or within a capacity that we can keep supported by our financial stability.

Any other questions? If not, then we have one another person. Person in the very front row, please. from the Reuters. I have two questions. First, U.S. presidential election was there. And the second, Mr. Trump administrations and tariff issue potentials towards China for USP SoftBank Group and any impact to portfolio companies are there. My second question, Earnings also announced second quarter has a contract with SoftBank Group was also recorded, which was 400 million. And what was the content of this contract? So first question, I will answer that. And the second question, Ian, please go ahead. So first question, presidential election. We have not much of the comments on that. So Mr. Trump to be being a president-elect and also I hear the news regarding how they're going to have a China policy. But we are the company of investments and of course we need the management of the portfolio company in China and also We very much slow down when it comes to the investment in China, new investment in China, as we mentioned in several times in the past. We don't have any business operation in China, so we don't have any direct impact to our business performance of our company itself. However, indirectly, our portfolio company, Depending on the China policy by Mr. Trump in the future, there may be some damage or negative effect. And for those, we would like to pay close attention and monitor them. And for the second, Ian, would you please go ahead?

Yeah, thank you for your question. Yeah, so during last quarter, we signed a multi-year agreement with SoftBank to provide them with some technologies and services. This is an agreement very similar to other contracts that we sign with customers, and also similar to other agreements we sign with customers. It's not really for us to disclose the contents of that contract, nor what end markets are being targeted. That is something we would normally push back to the licensing company. So maybe GoToSend might like to comment.

Well, we believe this is one of the transaction similar to others, so I think that you answer everything, Ian.

Any more question from the floor? If not, we'd like to conclude the SoftBank Group Co-op earning results announcement for six months ended September 30, 2024. The video footage of this meeting will be distributed on demand from our corporate website. Thank you very much once again for joining SoftBank Group Co-op earning results announcement for six month period ended September 30, 2024.