Softbank Group Corp

Thank you very much for waiting, everyone. Now we would like to start the SoftBank Group Co-op Earnings Results Announcement for the fiscal year ended March 31st, 2025. First of all, I would like to introduce today's participants. From left, we have Yoshimitsu Goto, Board Director, NCFO. Kazuko Kimiwada, Corporate Officer, Chief Sustainability Officer, Senior Vice President and Head of Accounting Unit. Navneet Govel, CFO, SB Investment Advisors and SB Global Advisors. Jason Child, Executive Vice President and CFO, ARM. Today's announcement is live broadcast over the internet. Now I would like to invite Yoshimitsu Goto to present you the earnings results and business overview. Good afternoon, everyone. Thank you very much for sharing your time with us today. So today is a kind of a summary for the fiscal year, a whole year, full year. So let me dive into the presentation. So the past one year, economical trend, market environments, it's been very uncertain, very unclear, continues to grow. U.S. tension has been escalated. Market, including Japan, has been confused with the situation. At the same time, unfortunately, we've been seeing ongoing conflicts across the regions. And after Mr. Trump assumed president, there are many policies, direction changes, which also impacted to the market. Of course, leaders, head of the countries, they always focus on the prosperity of their own country. But when you think about the worldwide peaceful system, optimal for everyone, which everyone has been enjoying the free trade in the past, but the free trade also making some disadvantage as well. And from that sense, U.S. position is not always selfish. The cost for maintaining the peace in global wide is something that we need to focus. Otherwise, we cannot really solve the situation. And I believe tariff is one of the options for that solution as well. So I believe that's something that we need to focus, refocus once again from the market and financial industry as well. And under such circumstance, how are we going to do in SoftBank Group? Without any change, we keep focusing on Our corporate philosophy of information revolution, happiness for everyone. This marks 44th year since the foundation of the business. So from the beginning of the company, beginning of the business, we started with the distribution of PC software. And that was the motivation to start the business by Mr. Son. And gradually, we started... revisiting what is the information revolution every time and then. Information revolution right now is AI revolution. From AGI to ASI, how can we benefit society and the people, and how can we address And how can we play the role for such changes? That's the kind of things that we always need to pay attention to. And this has been used for the AGM last year. So to make this ASI, realize there are four things that we need to focus right now. First is the AI chip. This is going to be the core of the AI so that the ARM and other companies need to focus on AI chip and also robotics. which also requires data center to support for the evolution of the AI and also the generative AIs. And for that, we need energy. So those are the agenda that we've been thinking for the past few years. And this year, I believe that it's been a year of green shoots. More specifically, I believe these are the actions that we made based on that understanding. First, we announced the Stargate project in partnership with OpenAI, Oracle, MGX, and at the same time announced the Crystal Intelligence with a partnership between SoftBank Corp and OpenAI. An additional offload on investment to OpenAI has been committed and up to 30 billion upon full syndication, and also decided to acquire Ampere for $6.5 billion. That's a part of our strategy for the future growth of our AI strategy, AI revolution. And that is expected to be closed in second half of 2025. So we were able to make such big steps in this fiscal year. And many people wondered, what's Sopsbank doing? What are you going to do? There are many questions also concerned about what we are going to do. But this time that we were with this fiscal year, we were able to show what is the action that we are taking. And for the fiscal year 2024, as a financial summary wise, these are the highlights. First of all, we've been seeing the weaker performance of tech stocks so that we've been seeing also the big market volatility and net asset value at the end of March. 25.7 trillion down 2.1 trillion year over year. But still, 25 trillion net asset value with the high liquidity, which I believe is the only one company in Japan which has a high liquidity in net asset value. Also maintaining financial policy on loan-to-value. and cash on hand, no change for the fiscal year 2025 as well. And net income of 1.15 trillion, up 1.38 trillion year-over-year, first profit in four years. As an investment company, most important KPI has been... bit different from enterprise value, I believe. However, still, net income, having a net income, profitability is a very good thing. So I believe we are very happy to see this profit in four years. And progress toward realizing ASI, so that's target announced. Following investment in OpenAI, quite a large number, amount has been announced. These are the highlights for the fiscal 2024. Key indicators. These three indicators we always revisit with you. Net asset value, as you saw, 25.7 trillion. Loan-to-value 18%. Compared to last year, March end, 8.4%. 10% point increase. But at the same time, We have guidelines of the 25% for loan to value or safety level so that we still have a very good headroom there. Cash position, as we actively made an investment, so the cash position decreased from 4.7 to 3.4, but still 3.4 is very much good level of the cash position from our understanding. And, of course, our next announcement is to show you the end of the quarter, which is March end. However, our net asset value changes based on the share price. So based on this morning's share price, we made the performer numbers here. On your far right, as of this morning, net asset value 27.4 trillion recovered from 25.7. So about the same level as last year, March end. Don't you value also being improved? Cash position, we've been spending a little bit, so 3.3. That is the latest, latest performance numbers because we are the company watching the balance sheet. So I also wanted to share this performance number with you. And these are the history of the net asset value. Net asset value is the most important indicator for us to see a business. Our share price is coming from here, I believe. So, of course, market changes varies every day. It goes ups and downs. And if it goes up, we are happy. If it goes down, it's unfortunate. However, it's not something that we should be being happy or not happy every day, but we should be. It's not a quarterly basis. It's not the annual basis. But I believe we need to see 10 years, 20 years as an investment company to end. Whether are we showing the tendency to increase our value? And from that sense, I believe this is the most important side to share with you. Cash position. We have an ample financial resources, 3.3 trillion. This covers two-year debt redemption, which set it for our financial policy. Loan-to-value, 18.0% as of the end of March, 20% pro forma basis. Our policy is to maintain the loan-to-value less than 25%. As of today, we still have a very good headroom here. There may be some fluctuation here. Sometimes we kind of hit the gas for the investment activities, but sometimes market volatile so that it may. hit a 25% threshold, but still, I believe that we do need to make sure and share that how we're going to bring it back. But at the same time, try to avoid such situation. We would like to manage our financials as much as possible.

Now, consolidate the results. Net sales, 7.2 trillion, up by 487 billion year-on-year. mostly driven by SoftBank KK. Gain on investment was 3.7 trillion or up by 4.2 trillion. Income before income tax, 1.7 trillion. Net income, 1.1 trillion. So as you can see, our performance was pretty good last year. Let me elaborate on gain on investment later. So if you could go over each topic, net income. In FY 2020, we recorded almost 5 trillion, but we have been suffering negative numbers since, but it's been improving. And in FY 2024, we saw the positive number for the first time in four years to 1.1 trillion. correlation between gain or loss investment and net income on quarterly basis but the trend wise it's been going up in the latest quarter we posted a very strong result which we are pleased with And talking about gain or loss on investments, which are fluctuating every quarter. So I should elaborate on this. Sometimes we sold assets earlier or with the prepaid for the contract like Alibaba. We monetized based on the fixed share price. And then the share price went up. on our accounting basis we can post up gain but we also have to record the derivative loss but from investment gain or loss perspective we cannot net out so if you can look at the colored bars those are including Alibaba, for which we already sold shares due to prepaid forward contract. We posted 1.5 trillion gain on investment, but dotted line shows derivative loss. For example, Q2, 1.5 trillion, and Q4, 1.2 trillion, and Q3, 686 derivative gain. In Q3, of 3.7 gain loss on investment, our real power is reflected in the colored bars. All in all, this is the final result. Gain or loss in investment is reflected in income before income tax. So deducting a derivative loss, our actual capability is around able to yield around over 1 trillion yen of income. or gain on investment. Foreign exchange. Well, it was fluctuating in the last quarter. For example, as of March 31st, it was $151 last year. But as of March 31st, 2025, $149 a year. But in a span of one year, it was a little impact on our result.

And I'd like to share some segment-based reports, starting from Vision Fund. This quarter, as a profit, a gain, and actually the Vision Fund 1 contribution was lost. Vision Fund 2 was lost. due to the public securities impact was there. Maybe we can touch on a little bit more details later pages. And here is the breakdown of gain and loss. If you see the Vision Fund 1, dark blue, mainly by dance. And based on the valuation, this is coming from the market factors. So as a result, out of the 1.8 billion numbers, majorities are coming from this market factor, preliminary guidance. And on the right-hand side, Vision Fund 2, the green one is a positive one, which is primarily open AI. So originally, we had a portion already, and in April, made the latest round and using that valuation as referring to recent transactions. But the public portfolios were a bit of a drop. Although it was a very good market in India, however, some slowdown and also the drops in share price of those portfolio in India was one of the reasons for that. But hopefully that we'll be able to see the good recover from there. And here is the cumulative gain and loss on investments. There were some big drops in the past, but now that we are coming very much back to the water face and There are still good pipelines for the Vision Fund, which is something that makes me excited, so that after this, hopefully, we'll be able to see better numbers going forward. I'm convinced that we'll be able to share good news going forward. And here is the cumulative investment return. Vision Fund won $90 billion investments, performance $113 billion, pretty good so far. On your right-hand side, Vision Fund 2, 60 billion investment. We are still return here at 37.9. So we would like to show you the good return of the performance of the Vision Fund 2. And here are the pipelines for the future growth. So from the left-hand side, We have made 55 listings of the portfolio companies since the inception of the vision fund. In fiscal 2024, five companies went public, a little bit smaller than the other years, but there were good IPOs. And also, late-stage companies, which matured in the way, saw that the total fair value of the late-stage portfolio is right now $36 billion. And these are the logos of the late-stage companies. Not only this, of course, there are others as well, but these are especially the highlights. For example, ByteDance, Klarna. Klarna actually was ready for the IPO, but has postponed. Quebec, Fanatics. Of course, OpenAI. Those... can be the good upside for the future after the IPO. Of course, I forgot the pay pay, not to forget a pay pay, one below the open AI. Those are actually the good potential contributor for the uplift of the performance of the Vision Fund going forward. And the new investments in fiscal 2024, There are several, but for example, these are the companies that we made in fiscal 2024. You see the open air logo many, many times. But at the same time, Helion, this is the next generation fusion technology company. It may also can be the good driver to changing the world. Green, Runaway, those are great companies too. So those companies that relates to AI and AI revolution and also the expected good upside, it's something that we Vision Fund team working on to explore so that we'll be able to find those good numbers, companies.