Softbank Group Corp

Thank you very much for waiting everyone. Now we would like to start the Software Group Corp earnings results announcement for the first quarter of the fiscal year ending March 2027. First of all, I would like to introduce today's participants. From left, we have Yoshimitsu Goto, Board Director and CFO. Kazuko Kimiwada, Corporate Officer, Senior Vice President and CAO Mark Agni, Executive Managing Partner, SB Investment Advisors and SB Global Advisors and Jason Child, Executive Vice President and CFO. 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 your time today. I am Yoshimitsu Goto, CFO, SoftBank Group. First of all, I would like to express my deepest condolences to those who lost their lives in the recent Kumamoto earthquake. I also extend my heartfelt sympathies to everyone affected by the disaster including those staying in evacuation shelters or living away from their homes under difficult and uncertain circumstances. As SoftBank Group, we would like to support as much as possible. So SoftBank Group, SoftBank Corp, and L.Y. Corporation, Fukuoka SoftBank Hawks will donate. And also encouraging public contributions. We will continue to support the recovery and the reconstruction effort through the services provided by our group companies to help those affected regions regain their daily lives as quickly as possible. Now that I would like to go into our earnings results. So towards June, compared to March close, market has been dynamically moving. As you know, SoftBank Group is an investment company. We can be affected by the market. And investment portfolio valued by the market is basically reflecting to our results. As a result, at the end of June, our net asset value which is the total value of our investment portfolio. This interest bearing debt gives you a net asset value 72.3 trillion yen. So this is a record high number. Our performance is actually described by this value. I believe that this is the most important indicator to see and value our enterprise value. This is still a rough estimate, but the pro forma basis, the latest information was net asset value is about 58.3 trillion yen. So it is a fact that it has been declined from 72.3. But actually, if you see the trend in the past, 58 is already a great number to be achieved. So I would like to also show this together with our history. So this is a kind of the record that we've been experiencing. And also this itself actually shows you how much potentials do we have for further growth in the future. So as I mentioned that every quarter, there are good times, bad times. But at the same time, we do not really become too happy or too sad about short-term fluctuation. We always look at the mid to long-term period and how are we building the base for the further growth and how that's going to be reflected to the future growth. Our investment strategy is pretty much equal to our business strategy. So as an ASI platform provider, what do we need to do? So we always kind of think backwards once we set the target and then that we would like to discuss what we need to do. Why are we addressing AI infrastructure? Because If you don't address AI infrastructure, you cannot see the enhancement or acceleration of the speed of AI model. OpenAI and other hyperscalers, those AI model players, that we would like to accelerate the speed of those people or those companies. And by addressing AI infrastructure, that can also accelerate the growth of ARM, for example. ARM, as you know, They actually designed the core and the heart of the older chip and they have a dominant market shares for that. And by having more and more chip to be shipped, then their basic business model will grow. And not only that, recently ARM has announced to also addressed their in-house chip with the high quality, high capable chip will be used in the many AI models, AI infrastructure. And because we've been telling market that we try to become a company to change people's lifestyle, So lifestyles or the working styles to be changed. Physical AI is going to be the very focused area that we pay a very good attention to. This area is actually just a beginning and there is not much many company making profit. or we don't really know who will be the winner for the future in this area either. So that makes us even more excited to see. And each has a kind of a correlation to each other. So that is why that we address these four. So only for the quarter, but we do have some developments here, which I will be explaining in the later pages. So to become a real number one ASI platform provider is something that we are trying to achieve. and that's something that Masa is very much putting his effort into. And this is the financial highlights for the first quarter. First, 1.8 trillion yen investment gain. So this is increased by 1.3 trillion year over year. And the net income, 347 billion yen. Second, as I mentioned in the previous page, net asset value, 72.3 trillion yen, highest ever compared to the past numbers. And third, for the own investment in OpenAI, we have invest 20 billion in this first quarter. Towards October, we have a remainder of 10 billion, which is committed. And fourth, for the first quarter period, we have announced plans to develop five gigawatt AI data center in France, which was kind of highlights for our quarter. And now we would like to go into consolidated results. You see the numbers in each respective lines. But the investment gain actually increased dramatically compared to the previous fiscal year. And net income is another important number, 347 billion yen. So I will explain you the trend from the past, but something that missing from here, which is the net asset value. So I would like to also add once again that the net asset value is also important KPI for our company. Investment gain or loss on the net income, how it has been developed. So for April to June first quarter, 1.8 trillion yen, the mainly due to actually Intel. Last year, We've been paying attention to the semiconductor business in the United States and we invested in Intel. As a result, the first quarter, it has been making quite a good increase. And also ByteDance, invested by Vision Fund, the fair value increased. Actually, it was another contributor for the investment gains for the quarter. One more important indicator from the financial point of view is, as I mentioned, net asset value. Once again, end of June, 72.3 trillion yen. Compared to a quarter before, that has increased dramatically. And also, loan-to-value to measure your safetiness. This is a net debt over equity value of holding. At the end of June, 13%, which is also a very safe level or even too safe. So we may need to invest more, probably. That's how we believe being kind of tightened the loan-to-value. And cash position, 3.5 trillion back in the March end and has decreased a little bit to 2.3. But because this is due to the... Redemptions for the maturity of the bonds and also for the some investment activities. But still, it does maintain the necessary cash positions based on the financial policy we have. Net asset value, quarterly basis, as you can see, highest ever, 72.3 trillion yen. Loan-to-value, If you look at the trend from the past, as a financial policy, we have 25% as a one threshold. But at the same time, I would also like to emphasize 25% itself is already safe enough, but we make it even safer of our business itself. Because our company has quite a large investment from our own balance sheet, which is quite rare and unique compared to the other global investment company. So I believe this is important for us to share with you the safetiness of our business using loan-to-value. And why 25%, you may ask? It's because we do need to see some kind of threshold. Where do we think that the safety level are there? Of course, the financial people may understand well about the loan-to-value, how much will be the safe level, but for the public to understand, even that the market can go volatile, but still, as long as we keep this level, we'll be able to keep a company as a safe level. Thank you.

Now, let me talk about Arm, one of the most important companies to us. Revenue, in the first quarter, they hit the highest record, posting 1.3 billion. It increased 22% year on year. Amazing result. Fully diluted earnings per share. They hit the record high as the first quarter. It increased 29% year on year. Again, great performance. Guidance for revenue. They have a range, but the midpoint is 1.38 billion for the second quarter. Guidance for EPS, 47 cent midpoint. Compared to analyst consensus as of arms earnings announcement, both are higher, so I think that's really convincing and something that you agree on, looking at performance. RMB CPU cores for data centers are growing, as you know. It's been growing since 2019. Many hyperscalers have adopted ARM-based CPU, Cobalt and others, and Google. Especially, it grew. significantly in the last 12 months, which should have a positive impact on ARM's future going forward. Again, many tech companies have adopted ARM's products. ARM IPO-based CPU chips, have been used by about 50% of leading hyperscalers, like you can see on the slide, like Graviton, Axion, Cobalt, and Grace. They help us to raise ARM's brand value and recognition. As you know, ARM keep providing chip design since the beginning, but also ARM has announced that they would develop their own product by themselves, which is a huge jump from ARM's perspective. In fact, this CPU compared to x86 Per 1 gigawatt of data center capacity, it helped save up to 10 billion capex. Very efficient CPU, and as agentic AI is deployed further, the market of CPUs for data centers should grow significantly. and ARMS AGICPU attract more demand than what we had expected and what ARM had expected, which is all positive. And we have two more companies join as launch partners of ARM AGI CPU, Oracle and Varda, which is great. From a PC's perspective, well, in fact, Agentech AI goes into not only cloud, but also in varieties of devices. And NVIDIA announced a chip for PCs with Agentech functionality. And this has ARM-based great CPU. Then open AI. And by the way, if you have any questions about ARM, you can ask Jason later. Now OpenAI, as we mentioned in the last earning result announcement, we made a commitment in March and that commitment was to invest 30 billion this year and of them 20 billion were executed and remaining 10 billion investment will bring total investment to 64.6 billion and ownership to 13%. OpenAI's GPT is a base to offer a variety of products for consumers, as you are familiar with, ChatGPT is there, and for business users, especially for software engineers. Codex is offered, which we focus on and they focus on selling Codex. On top of that, ChatGPT work was released recently. So AI model evolves and product performance goes up accordingly. In 2022, GPT-3.5 was released as what we know as ChatGPT, and GPT have been adding more and more functionality and capabilities, more than you may imagine. GPT-4 has an AI capability that solves problems, not just answers questions. It was released in March 2023, three years ago. And GPT-5 has agentic AI capability, so it is AI that performs tests. So compared to 3.5 to 4, it is a significant evolution. And the latest one, GPT 5.6, agentic functionality is even enhanced. So it is an AI that gets work done. So AI does work autonomously, which is unique. Talking about the GPT 5.6, which is the latest revision. So from expert's perspective, how the 5.6 is viewed. So there was an evaluation methodology developed by UC Berkeley and others. According to their evaluation, OpenAI yielded highest performance in terms of score. And if you take a look at on the right-hand side, compared to other AIs, open AIs, 5.6 so, cost far less. So high-performing. Model with lower cost is how the GPT-5.6 is seen by professionals. I'm not an engineer at all. I am a finance guy, so I cannot answer to any professional or expert questions, but this is as much as I can tell you generally. Codex for software and engineers has been growing significantly. In December 2025, monthly, excuse me, weekly active users were 0.4 million, and in July, 10 million. It grew 24 times in just seven months. On top of Codex, ChatGPT work was released for business persons, so combined Codex and ChatGPT work, again, weekly active users grew 25 times in seven months. So OpenAI is kind of latecomer in terms of enterprise market because they started off with the retail users, retail market. But the OpenAI has advantage in terms of their brand recognition among consumer market. So going forward, enterprise market is a key focus so that they can grow more in the enterprise market. Now, let me talk about PaaS, or Patching as a Service. In July last month, actually, SBOAI Japan, a joint venture between SoftBank and OpenAI, announced and launched PaaS as a cybersecurity solution. We are a holding company. We are a strategic investment holding company. From our perspective, our job is to make sure that our portfolio companies work together so that we can help them to raise their corporate value. We want to help them to do that. Again, this past launch between our by our portfolio companies are a great example. This parse will be rolled out to 3,000 companies in Japan. So they start from vulnerability assessment, and once vulnerabilities are identified, they run the program to apply patches. From end to end, they offer this parts service to those critical infrastructure companies in Japan, 3,000 that is. And later, we want to even offer cold modernization

Now, let me go into AI infrastructure. AI Data Center Portfolio, we are mainly leading right now, is in United States. And also, we have a project in France as well, which is announced this quarter. For United States, Ohio, and Texas State, in France, all the France, which is northern France area, is actually the place we are addressing our project. In France, we announced a plan to develop 5 gigawatt AI data center in France. So in June, 2026, there was a Choose France Summit. And there, in front of President Macron, We have announced a plan for the development of 5 gigawatt. For the first phase, 45 billion euro investment to deliver 3.1 gigawatt of AI data center capacity in northern France by 2031. More specifically, Dunkirk, Bhushan, Bosco, those are the first site that we will be addressing. First Gigawatt Moscow AI Data Center is actually designated as fast track project by French government. So with that, we have secured one gigawatt of power and also accelerated grid connection is actually addressed. In United States, if we try to address the data center project, or if we try to do in Japan, because data center consume a huge volume of power, so you also need to build power generation plant at the same time, which means you need double the size of CapEx. But in France, compared to the rest of the world, they have a very unique advantage, which is that they are actually the exporting country of the power. So that they have actually, they can provide the power to the data center use. without causing any impact to the French citizens. But still, they'll be able to allocate some power to the data center, meaning addressing data center project approach is different compared to the other world. And they do have a kind of a good base to proceed the data center project from that reason. And also in France, we've been building supply chain for AI data center equipment. and establishing a local supply chain for power modules in Dankook to accelerate data center development together with Schneider. So SoftBank Group and Schneider are going to set the supply chain for the power module and we'll be able to accelerate data center development. In United States, Ports Technology Campus, Pike County, Ohio, which we announced the 10 gigawatt large-scale data center project. This is quite a huge project. We are currently in discussion towards execution of this agreement. And we are coming to the final stage of such discussion. And at the same time, we are expecting construction. It's starting in 2026. One another project that we've been working on in United States, we are in Milam County, Texas, AI Data Center. and already have a lease agreement placed with OpenAI and building one construction on track for the delivery. To proceed our data center project, We have a group company which plays a very important role, which is called SP Energy, actually established back in 2019. Originally, they've been addressing many power projects in the United States. And they've been expanding their business domain to data center. because power and the data center in developed, integrated way is going to be the benefit and advantage and we have a very experienced management to lead the business of SP Energy. So cumulative project capital raised, which is almost the total number of project amount by SoftBank Energy, is about $19 billion. And power generation and the storage capacity under operations or under construction is about 5 gigawatt. So they do have quite the size of the business and the presence in the States. In May this year, they have already filed the confidential filing for the Form S-1. And we are very much looking forward to see their further development in the future. and NEO Cloud Service, which was also presented at SoftBank Corp's earnings results announcement a few days ago. So our domestic mobile operator and its SoftBank Group holding company, together with them, we are launching the project for the NEO Cloud Service in the United States. So this NEO Cloud, Business will be providing AI compute via the cloud. So AI data centers which will be provided by SB Energy is bringing into the special purpose company. and the service will be provided as a cloud service to the off-takers. We believe this is going to be also another important business model for the future. Now into vision fund. Investment gain or loss, this is since the inception of the business, it's going well. and actually adding some more investment gain as of the end of June, 47 billion. And this is a breakdown of the gain or loss on investments for the first quarter period. Vision Fund 1 on your left-hand side. mainly due to the increase in the fair value of bite-downs. These led to the Vision Fund increase of the gain on investments by 2.3 billion. And on your right-hand side, Vision Fund 2 and LATAM and others, a little bit of a negative. This is because of the pay pay which went public this spring and the share price of pay pay a little bit weak this quarter actually that was the main reason but since then pay pay is actually recovering its share price and for the future we are still very excited about this business too. Cumulative investment return including the exited companies, we showing the total of the investment return and on your left, visual fund, 114 billion cumulative investment return. So exceeding largely compared to cumulative investment cost. So green portion is the exit case. So actually that we have already exited $73 billion. Also the investment monetization, so those green bars that we have just mentioned in the previous page. In every quarter, especially in the recent quarters, about 1.5 billion in average has been monetized and made its return in the past two years. Main divestments were on your right hand side, Coupang, Royband, Food Truck Alliance, DoorDash and so on. So those actually went public successfully as a result that we have addressed the monetization of those. Of course, not only the invested portfolio, but the private companies. There are many ways to exit, not only sales. Sometimes you can sell in the market for the public share, but as private shares you can have a transaction, or a Monday can be another option too. So there are many ways to go exit of the portfolio. and we would like to execute the good options available and we have a new CFO for the Vision Fund, Mark Agni, especially have an expertise in the monetization so far. Public listing and pipelines. Late-stage portfolio on your right-hand side, total fair value, because of the follow-on investment in OpenAI, it went to $133 billion. So compared to March end, late-stage portfolio total fair value itself increased by $15 billion. and let me pick up some of the portfolio companies which are in the late stage. Prism, formerly known as OYO, You may have seen in some Japanese market as well, and they've been operates a global hospitality platform. So they have rebranded under the name of Prism, and was already made and filing for public offering. They support accommodation partners with demand generation, dynamic pricing, revenue management, and day-to-day operation. They have themselves managing actually the hotels, but now that they're very much focused on the platform, so they have clearer vision and direction of the business models now. They are also a good promising company. And the clerk is the... They offer an online platform for travelers to discover book tours and book tours, activities, transportation, hotels, and more around the world. We have invested in 2019 first quarter and the business model itself has been making a good momentum and we are also excited about this company. And one note on the PayPays movement. So we would like to use some slides to share with you. So this was announced in June 4th this year, which was to make T&D Financial Life a subsidiary of PayPay Corporation. So having this company under the umbrella of PayPay so that they will be able to provide comprehensive financial service on top of what they have already. So by having a life insurance business based on the life stage of each user, we will be able to provide very good comprehensive services. We've been looking into this agenda and at this time it made good results. Another one is the Capital and Business Alliance with Seven and Nine Holdings. On your left you see Softbank Corp, Domestic Operator, PayPay, and Mitsubishi. Sumitomo Mitsui card, 100 billion each. So the ownership stake itself is about 2.13% in Seven and Nine Holdings, and we are starting the capital alliance, especially when it comes to PayPay. It is a good achievement here because There are about 20 million customers per day visiting 7-11 stores and 30 million transactions per day made by PayPay. So utilizing the data in between so that we'll be able to utilize and see the future combinations Number of the store-wise, they have 22,000 stores in 7-11, and the PayPay has a 75 million user base already. That can be a great value generator for each other. Now, let me talk about physical AI.