Q1 2024 SoftBank Group Corp Earnings Call
No we would like to start the Softbank Group Corp earnings results briefing for the three month period ended June 30th 2023.
First of all.
I would like to introduce today's participants.
From lift.
We have you'll see me to go toe Board director and CFO .
Yes.
Yeah.
Because of the cold weather senior Vice President and head of accounting unit.
That's neat Gogo CFO , if be investment advisors and CFO remember, our big 60 of Kentucky is be global advisors.
Today's briefing at say broadcast over the Internet.
Yes.
No I would like to invite Mr. Goto Board director and CFO to present, you the earnings results and business overview.
Let me start with the police.
Yeah.
[noise] [noise] well.
So very much for Europe .
Our agenda for today's meeting my name is good to see if also sound good.
So I would like to.
Present, you the earnings results for the first quarter.
First of all.
I would like to touch on the market state does to begin with.
On the investment company.
Yeah.
But we need to be keen on.
If the market environment and also they go let me go environment.
At the same time, we also need to see the geopolitical situations global situations. Those kind of thing is something that we always need to be king.
And studying for for this April to June period, we've been very careful to watch all of those are important <expletive> does the P. B S earnings announcements I said.
Market is showing D a recovering trend.
Fine, but at the same time also there are still several considerations, which we do not see the clear solutions for so that we do need just to keep on being very alert and a careful but at the same time also we would like to take a lead a.
Before the all the movements occur so that but at the same time to be selectively that the way you would like to consider the investment activities and then looking at the equity market.
In the last three months actually showing a very good strength and I just see on the graph.
Well not top of this graph is still telling somebody does venture capital index. So private a good days could be a is also showing a very good trend in the past three months.
At the same time that the public Securities are is also showing a good sign too and their Golden Dragon in China, The Chinese market. It could be I looking at the January did much Oh, you're a big concern, but no for the for April to June period, showing a good recovery trend.
But when you go a little bit more deeper.
Especially the public securities in the United States, We believe.
Oh, My goodness Sun, seven so cold, which used to be called the godfather, one such logos of habit Amazon Apple met the Microsoft Nvidia Tesla those seven major companies large companies.
Share price is actually E, making a big jump in becoming a big stride by for the recovery of the market of course.
And there are some of the positive factors as well for this recovery in the for US looking at the public Securities smoothed meant in the past three months extra they are the number has been showing a very positively Nasdaq compared with NASDAQ. We believe that the other trend is becoming.
Very similar to NASDAQ These days.
And.
Looking at the current status of the market and the visual and fund progress.
Looking at that.
But our past a few period actually we returned to profit for the first time in six quarters. This is one of the highlights for this earnings I believe.
This is the visual and found a stand alone basis. So it's not a corn funny. They did this so that they are.
Adjusted figures showing here when you're right 975, I've said result.
To the cumulative gains also on the investments.
This again is the first turnaround into us for in six quarters. So now you'll see that the churn has a turnaround.
Yeah.
So based on these trend.
We also.
Like to make a good balance between gas and break for the.
We investment activities.
So June April to June called the <unk> Digital fund investments and also Oh.
So investment from S. B G E in total.
It was about 1.8 billion are you asked others of the investments has been executed.
Since we made that a little bit of he made the announcements or shifting to offense mode. That's sure a whole year. It was almost stopped in terms of being best thing. So then you look at the three trend, we being carefully carefully restarting our Mb.
This mean activities I hope you get.
Get that kind of a sensitivity yeah that the we are carefully and slowly moving back to the investment activities. The investments that we have done so far has been selectively considered and at the same time keep focusing going to a trend.
And for the future growth that though we would like to start having a good relationship with those companies that the we are full for the future of the group.
Back in June when we had a shareholders' meeting our chairman and CEO Martha came back to the stage are in talks about a shifting to offense mode.
Uh huh.
I believe.
We oh, so they are shifting to defend smoothed that but at the same time from a see a fourth point of view, we would like to be a carefully and selectively when it comes to shifting Geofence mode. Our baseball team hopes also needs to be back to offense mode. We've been having a bit of a difficult games intelligent games. These days.
But.
Baseball as well as the business needs to shift towards offense mode. After we had a very challenging period or are in the past.
I mean, it's those under sending me.
Sure.
Share with you the consolidated results.
First quarter consolidated results do you see net sales.
As we are the investment holding company so that the 1.5 to the medium.
A more important the nicotine gum, a minus 470, you said would be the on yen.
And also all the.
Lewisville and investments are and then you'll see that change on your right.
2.6.
G idioms, Oh, Dear to you lumped out net income improvements, but the loss on investments has improved by 2.1 and this is compared to the market trend recovery.
Maybe we should be a little bit better than this numbers.
But there are some reasons behind for those.
And also the gain on gain and loss on investments.
This is D a visual and fund number.
So this has been nearly at all for the consolidated base.
So there are several of our companies and <unk> Bay.
These have been netted off from this number at the point of view, but still that that they are coming back to almost.
Back to the originals and we stubbed our games and also on the investments in mind that 699 BDO in yen. This is materially improved compared to the.
Be best Yeah, but when you look at the breakdown.
Out of the 619 9 billion yen.
Well reached 550.
He is due to a D.
A loss on the Alibaba baidu to Golar share price and.
I want you to recall that the this monetization nobody bye bye share has already been completed however, we still keep on holding our shares and because we have done did anybody ever transaction, which has already completed.
This is kind of before the transactions are therefore.
When share price goes down they need but the point of view it as positive.
Uh huh.
So this a derivative gain related to the chess is shown on our adult deadline sibling didn't 69 medium is does anybody have a gang therefore that the accounting I didn't realize it it's different so that that this is still remains is that they've got therefore, the gain and loss on new business, but that he Bubba 200 video.
Yeah, and it's positive after net net so for the looking out the gain and loss on investments actually effectively we can say that that Oh, our state and so that's a positive that's something that the real status of the company.
And here is the income before income tax by segment.
Yeah, the showing the performance of the income before income tax so in this man business supporting companies.
It's still at minus Ah. So you had an 894 change wise hunted a difference is 803 and that'd be doing fund is.
Contributing to unfortunately union.
Positive the.
And consolidate that basically it was minus 276 billion yen and net income 477.6 video as I mentioned earlier in the previous page.
Yeah, I want you to see the breakdown of that and as a matter of fact because of the weak yen.
Are there a forex a 464.6 billion loss on foreign exchange.
So this by itself.
Should be really good at deemed a gain and loss on investments, but here in net income the Forex impact has been showing here. So this is actually comes up to the P&L. So as an investment holding company weekend.
Whether this is good things so bad things Akshay. This is very good which I will cover that later pages. So as a result net income although that the this is minus 470, you said would be then how about the east side or the breakdown is coming from the P&L or negative from the Forex.
Again that I believe that effectively each almost breakeven that's the kind of.
Real picture of Softbank group.
Well there are a very important key indicator for us as an investment company.
Net asset value.
Oh and lava.
Willing to Baidu or L. T V.
And the cash position.
Compared to the end of March this year.
And all indicators, we have seen improvement.
For example novel.
Increased from 14.1 to 15.5.
And L T V and have them to an 8% cash, but just shown almost six trailing him. So all three indicate us improved so.
You can be proud of all the thing that we are in good condition in shipments of Allah financial basis.
This slide shows a change in now the main driver as a forex.
Well yeah.
<unk> is weaker.
The body of asset goes up.
Yeah.
So it's not a bad thing.
Every quarter, we have announced financial results.
And the share price itself plus point for which has been.
They've got to for a long time.
And that's true I mean, we have seen the positive number of a share price for the first time for a long time.
The impact of Forex inching muscle P M L.
Minus 0.5 trailing yen impact.
Yeah.
But if you analyze further why.
It's a negative thing because boring.
And foreign exchange denominated them.
Yeah.
Increases in shipments of the yen.
And boring and foreign denominated currency.
Do we have a lot or not.
For example, a flooring.
Currency denominated bond is of course, a boring in foreign currency and we have group companies and.
[noise] me do exhibit need do recoup and one we get a contributions from group companies. There are a lot of inter company loans and foreign denominated currency.
Yeah.
That's why you see the neck I pick a number because ah boring and for any.
Currency denominated at.
The value.
When down when the yen is weaker.
And in terms of net asset value. It has a positive impact of 1.3, Chilean so again weaker yen as good for us as I mean best cement company.
And this slide shows NAV per share and the share price.
This is also one of the important aspect that we should look at.
And investors and analyst often say often use the term the softbank discount.
And Nab of course sure.
Yeah.
If you look at that.
All the share prices are very weak.
Because of the discounts people often thing.
As of end of March that discount was 46%, but at this moment, thanks to increased share price.
And more than the increase of assets. So at the moment to be looking at a 36% of discount so discount has improved it.
To what extent, we should have it improved of course, they're all of the discussions and our comparison.
Pre tax.
From a cash tax perspective in theory, it should not be zero, but for investors do you want to.
I'll make effort technically and essentially to improve this odd discount to stay desk.
This slide shows equity value of holdings.
The highlight here S Alibaba monetization, which we completed.
And if you look at.
Dark blue second from the bottom up.
Three seven in Q1, FY, 2020, three which indicates arm.
Baidu, so steadily and has been.
Adding value to its business. So all in all equity value of holdings was $16 nine in the quarter.
So it has been decreasing for a long time, but now we are beginning to see the turnaround.
Since 19.
98 this.
Graph shows the trend of net asset value I joined Softbank into town gone. So I have being in Softbank for almost whole time of this a time horizon.
And again, we are looking at to upward trend this quarter and last quarter.
Yeah.
Considering a possible IP all of our I mean, we are expecting this to improve further and increase further.
Okay.
This slide shows trends all gone to about you looking back the history currently 8% and this is the lowest in our history loan to value is low means.
Safe is it good or bad.
Well people may stay at that you're not doing your job you choose safe, but as an investment company.
Taking into account all the.
Our stance change from defense to offense.
Loan to value of course, we have a strong rule all financial policy.
I mean, you want to make sure that we operate our business in the.
Safe.
Disciplined manner and.
To what extent.
We should allow loan to values.
Without Asian, Theres, no correct answer B, keep saying, 25% because <unk>.
Two 5%.
Don't you think that 25%.
As seen from just a traditional perspective.
Since we became an investment company.
Loan to values average for the vast afford ear with a 15%.
And they're looking for B make sure that we are running a business in a very safe manner from a L. T V perspective.
Now.
Our cash position.
Yeah.
We believe that.
We have our highest amount of cash, but just young in our history almost six drilling them.
So those are the key indicators and also I touched upon our P and L and balance sheet.
And Softbank Vision fund.
In the first quarter.
Total.
Gain on investments was $1 billion.
We have three boxes, if you will in Germany from Vision Fund Vision Fund, one, which you started first and vision fund two is ongoing vision fund one investment was Oh liddy completed.
And that's on the phones and Softbank Vision fund two are still making the investment.
We don't fund one.
He saw.
1 billion dollar is positive it would be Jones on juice still negative, but only a combined $1 billion of gain on investment.
Positive number for the first time in six quarters for vision Fund one.
Against about a $90 billion of investment cost return hundreds of 2 billion.
As you can see orange apart, which is exhibited.
Has been.
Getting bigger and bigger they have some challenging time, but there still are making sure that they get returns.
Yeah.
Softbank Vision fund one not only invest in public company, but also private companies as well which include arm.
One arm as listed.
And the one it's about the Asian S appreciated by the market I believe that will contribute to vision fund one a lot. There are a lot of our companies that can be this data and our pipeline.
And also we will support vision fund.
One and myself, we don't find the ones to make sure that the investment is a surely monetized beach unfunded too. We just started investment about three years ago.
It's been a going through a very challenging market conditions.
Against 52 billion of investment cost redone.
Only 33 billion, but this fund is still young.
And going for the big jump onto Chu will take a lead and future investments and.
We will keep watching our fund performance to improve their.
Their operations.
And this slide shows a body changes input to folio.
Which I'm sure you're familiar with it.
But our portfolio of companies gained or lost their values.
Left hand side shows.
The status.
Three months ago.
Cumulatively.
Unfortunately, however.
The Red Pie.
Rich.
Lost value.
With 346 companies.
The number has been.
Getting bigger and bigger from a 100 203 hundred 46.
As of March 31st.
Yeah.
For the portfolio have been deteriorating.
But if you look at the right hand side, so I believe the number of companies.
Lost their value.
Got smaller from a 346 to 343 and the companies who lost excuse me gained value.
The number increased from 101 212, a slightly increase again this S cumulative number.
Okay.
And if you.
Look back further.
On the left hand side.
Yeah.
[noise] homestead to deter them from October through December .
Half of the portfolio changed them.
Hum.
<unk> hundred 90 companies those are values and 88 companies gained values.
We saw a sign of improvement in the quarter from January through March, but if you look at the right hand side.
The number of company.
Gained about you.
Reached 250 and the company.
That lost value improved from 190 to 316.
So.
Again, we can say that we are beginning to see.
Okay.
The churn of the trend we will keep monitoring in vision fund.
Against a backdrop of challenging market conditions, and we can't be complacent, but for those portfolio companies.
We are looking at the positive change.
Rich I want to highlight here today.
In quarter one.
[noise] invested amount was 2.9 billion inching muscle vision fund.
And the visual excuse me Softbank to handle the investment was point Tonight, a total 1.8, so slightly.
We started accelerating investment.
Vision fund.
Has.
Close to 500 portfolio of companies and what do you like to take another bond stage of this network.
For our groups management and also synergy positive synergy between those company is also important enough need here is also making an effort to connect and the orange those portfolio companies. Each other so they'll connect is one of the.
Events that together people towards your companies to networking and that having a dialogue between those companies also inviting investment bankers or the Oh, our members too.
Study either good or bad about each other that has been held us sometimes during the COVID-19.
Period, he has done a in Oh Hudson also after they ended up being a being held at.
Paris, or Japan and saw them.
Or India.
At the same time, we would like to encourage those portfolio companies to start entering into Japanese market, then do we actually support those activities.
Here, how do you see that the we'd been influencing ecosystem to for them to enter into Japanese market already 50 upward toward the Ozark starts operating in Japanese market of course. This is just the beginning we would like to see and expect a bigger success Oh, such an activity.
And.
It provides business opportunities to Japanese companies inside and also outside so small groups, including Softbank KK.
Which is the.
Domestic telecom operator that but at the same time, they can be the big agent for the portfolio companies, who are coming into Japanese market. So supposed to fund KK has been playing a good throw a two kind of assist those companies coming to market.
[noise] here shows the AI technology mapping that I would like to touch on a little bit.
As we invest.
And also or shifting to offense mode.
We.
Because we would like to.
Ooh kind.
Kind of catch up.
The opportunities here of course that the mutual fund has done a start investing about six years ago and actually since then that we've been very much focusing on AI. These days, we see a very good trend and the popularity of the general debate I and a very much a trend but.
The junior debate is only one part of one component of the overall area, but there are other AI technologies such as the.
Much of our luggage processing deep learning machine learning and so on so.
I believe that we can break down into about 210 segments or 10, six times for the AI technology here that they show us that one of the examples of such and I think another G. Our use cases are starting from frontier thick to enterprise consumer and and so on so logistics.
Fintech is also included in here.
And it is also one of the examples and you see that the example, being best fees.
Full details of such companies if you like to meet to understand more please contact enough neat here, but the visual and fund has been already start investing or started looking into not only generate the bed bug variety wide range of AI technology and being very selective.
The money into such companies.
Next is.
Now I'd like to touch on that little bit about them here.
I want to make a comment however, because they're preparing for I'd be yours. So I cannot really say anything that's a comment I can say about I'm, sorry about that but for revenue.
You see the number of $641 million.
So called year on year, a slight decrease.
So short time period.
Semi conductor industry is on a little bit of a down cycle, but if you see the past three years.
The.
On your growth rate or the three year CAGR is 14%.
And also the value of this company.
Actually that the real picture is gonna be seen going forward. So that we see a trend are they are the ones that are designing chips and they have a very great track record of all such business is and we believe that there'll be about a huge in the many areas menu.
Does I cannot touch on much of the value that the legal has been told me are telling me that the very strictly that that should not be talking too much about here. So that I would like to stop here, but what I can say is that there.
Area that they are covering is even more expanding so not only that the walking on chip of course at the Intel are used to design and produce but the akshay.
Showing their capabilities are.
Starting from the mobile device that Theyre, having a great deal of by market shows and the many people utilize such mobile device smartphone to tablets that it's being used our insight and those chips are very much a close to a designed our chip.
And when it comes to cloud compute automotive.
Compared to five years ago that the chip for their cloud compute the automobile is different it's been changed automotive yourself that they its been evolving in the autonomous driving and so on a cloud compute has also changed because you need it to be a b those through this area so that the.
Hum capability can be.
Really taken a in the many many more areas. So in our life I O. T is the one that we can see smart camera or the facial recognition. Those is also or done with them at least are they just edge.
Technology chip, so I believe that the Dell chip he's Heidi.
The aged AR from them since Oh.
Every bad that the it's been used.
And one announcements that are done in May 2023 by is D. A computing platform for mobile.
And.
Yes.
A leading edge technology CPU has been built it in a software exam on gaming.
Immersive gaming experience, which you have ever experienced before that kind of technology husband also should since then and are they just a GPU is also mounted therefore.
Something close to your life.
The technology has been used.
But.
For the by the AR technology.
And the next is the in the videos announcements that they have announced the based supercomputer Ah recently back in May 2023, and that they have adopted the latest chips and.
And the two different computer we believe that the medical and scientific research is going to be making a good progress and also Europe's most energy efficient systems. According to Nvidia. So this is also a great <unk>.
Events that though we have seen and.
I feel plan is going very smoothly.
And today.
I am not going to share the financial state of our business brokers of arm from me, but there was a public filing is made.
N.
I believe.
Some inflammation is going to be available so that I would like you to wait for that.
And here, it's titled Reshaped, the industrial landscape because that there are some companies that do we have invested in April to Jim called them and are there are three companies that I would like to share with you today as a name.
Example, a basically its logistic related and because it is evolution of neat nizing every industry and are actually in tonnage.
Is basically the advertisement model from the business point of view, but the.
Advertising revenue.
Uh huh.
He is.
Yeah.
Or they do 0.3 trivium.
But the 1.82 deals for logistics, so it's quite a difference.
Oh, Dear logistic market size as a percentage of GDP in United States in Japan, a bit smaller size, but the 1% advertisement, but 9% logistics was quite similar to the United States.
Hey, actually redefine so they have a capability of redefining all the fixed or the industry. So that's why we believe that logistics can be defined in many aspects and we being a making some investments based on that hypothesis and Oh.
Leaving.
We invested in those three companies seem bocek, which was already invested by vision fund.
And what we did was to establish a JV with S. P. G's investment commitment of $3 2 billion and acquired additional 3% interest for 500 million in July 2023.
Also be.
Acquired all shares of broke sure Gray Vishal fund actually had interest of about 28% of this company and our V decided to privatize bye.
By acquiring old chairs and Teva existence, which is a Japanese company.
The E acquired a shaft or the 23 billion yen round in March to June 10, 210 three.
First same buttock that mean briefly share with you.
Yeah.
What they do.
Yeah.
Austin Boucek provides warehouse automation platform for retailers and the distributors.
Let me share with you a video clip picks up cases from the bottom to safely handle a larger range of products and powering the system to handle goods email original packaging.
This eliminates the transfer of product to and from trade their tone, commonly found in alternative systems.
Orchestrated by AI powered software and safety systems, the bots travel autonomous Lee at industry, leading speeds up to 25 miles per hour.
The autonomous spots required no charging downtime instead boss received quick first charges via ultra capacitors as they load or unload products from the systems lifts.
Dual robotic arms work together to build pallets three to four times faster than other systems.
Symbiotic build pallets are tailored to the layout of each store, reducing the need for backroom storage and sorting.
The robot build ultra tall stable mix SKU pallets with 50% greater density on average than human Bill Palace, and enables greater capacity and speed, while reducing cost.
Rather than pushing inventory to the next node in the supply chain the system pulls inventory through based on demand, creating a powerful competitive advantage for symbiotic clients.
So I thought it was the same Baltic.
And they've got great growth potential and.
They run at 40 kilometer per hour I think in a warehouse theres, a regression down to four kilo meter per hour because off a safety concern, but if theres, none no person the alcohol at all and nowhere.
Rabat Wow cars, Jim Ryan as fast as 40 kilometer per hour, so that should help improving efficiency of the warehouse.
Get out while the symbiotic.
We announced and establish a joint venture called Green box systems. So that we can provide warehouse as a service.
Two varieties of customers.
Next I broke sure Greg.
Okay.
They have had a relationship with them for some time.
And the four logistic providers.
They provide E C fulfillment.
And so then instrument system.
And robot solution.
And so forth.
There are a lot of competitor us ask Jody but.
Mi found value.
And that technology as well as the senior management team.
And that's how they existence.
Yes.
One of the three companies that we invested in recently.
They develop and deploy remote control technology and AI robots in fact, they have signed to big deals, but a major convenience stores in Japan.
They are good at developing AI based Roberts and.
They are growth potential again.
And something that we're excited about because it's so relevant to your everyday life.
Now, let me talk about financial strategy.
No change at all.
Oh My God.
How fast or slow too rigid investment.
We want to make sure that to me at her two of our financial policy.
And this is the commitment we have made and are we still have it.
And also financial management adaptable to both defense and offense is another pillar of the strategy.
All financial policy includes maintaining L. T V below 25% in normal times maintain.
Maintaining at least your ear was a bond redemption in cash I think.
We have a six year worth of bond redemption in cash actually.
It may be too much but again, we need to make sure that we have a plenty of.
But you shouldn't for bond redemption.
Bond market me get gets shut down immediately.
Okay.
We're in the bond market the CP markets.
Those two companies that rely too much on those markets May go bankrupt immediately there are a lot of a risky or dangerous companies in Japan.
E.
As an investment company may be one of those companies if we fail to operate properly.
Bond maturity.
Three year or five year or seven year lets say there are a five year bonds and one maturity commerce.
Should we be doing to you in cash or would you like us to give you similar financial instruments me want to ask those questions to those investors are for that.
Me.
Each of habit.
Plenty of cash in our hands.
And sometimes we get criticized and that criticism is wrong and it was you face a market risks.
For investors, it's important you have options.
So again running our business safely and something that we need to keep doing and also we want to secure recurring distributions in dividend income from S V F and other subsidiaries.
Again offense and defense, we want to be flexible.
And running Ala.
Financial operations.
Yeah.
If you look at the top right investment N D information or at least don't while maintaining finding house shelf stability, you don't want to Miss opportunities D. R.
Information news and we will lesion or if you want me to take a leader in the global environment.
And unnecessary investment activities are something that we will do it but at the same time, we have a very stable safe our financial operations capital allocation and the return to shareholders or something that our investors are interested in.
Financial improvement is something that.
Credit Investor May be interested in and a new investment is needed for companies growth and shareholder return is important for our.
Investors and financial policy is also important.
We made a share buyback was four five children and recently, we will do that but the timing and how much or give us some flexibility and.
We work on improving our finances and they'll be make sure. We have a very strong financial policy to meet our promises that we have where the credit investors.
Last but not the least.
Let me talk about taxes, I think I have never talked of attacks and public forum like this before.
And are there is some misconception that softbank does not pay tax in fact, some are media has such a misconception.
They've got those numbers in fact, we have paid a lot of taxes.
On a consolidated basis from F. I tend to 18th through tinted tinted true. If you look at the top right two six trillium, so four or five years, we have paid a coupon six Chilean him.
Usually where every year, we have paid 500 billion yen about.
Yeah on here.
And ER telecom operators.
Tax Yahoo paced attacks, but.
Holding company does not pay tax.
That's a misconception.
If you look at somewhere in the middle.
In FY 'twenty Chen Qi.
Shoot Japan for six nine points of them.
That's the tax that we paid in Japan, including.
Operating companies.
Tax 255 billion.
No the only tax paid about operating companies like Softbank and Yahoo.
S P G and <unk>.
Internet intermediate holding companies pay the tax of low.
Through our holding companies we have.
Me that a lot of investment.
Yeah.
S B G stand along.
And hundred subsidiaries controlled by us.
And if those 100% wholly owned companies were sold then those wholly owned companies paid the tax.
So again effectively Softbank group has paid 214, a buoy them in FY 'twenty attentive chip.
Overseas.
Of course, we paid 56 billion in FY 'twenty tend to CIT as an investment vehicle.
So again in Japan, as well as overseas.
<unk> as an investment holding company paid taxes.
Okay.
Yeah.
Just for your reference top 10 consolidated corporate income tax payments.
I wish a media had created a chart like this but we have done on behalf of them Toyota Motor of course, they paid a lot of taxes and N T T. He actually not far off from N T T cell.
So again, we work for the company.
And if you work for the country.
We paid tax.
So that's something that we'd like you to pay attention to as well.
So that's all for myself and thank you very much and B look forth you're hearing from you and question and answer session. Thank you.
Thank you now we would like to move on to a Q&A session.
First we would like to take questions from the floor.
Please wait for the microphone and start with your name and affiliation.
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Please.
We ask that you turn off all the other live web cast to prevent any equating.
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If you'd like to show you cause shows please press la and Boston.
We would like to take up to two questions per person. So that we can take questions from as many people as possible.
We are.
And also if you are on the zoom in Japanese please ask your questions in Japanese now we are starting from the floor. If you have any questions. Please raise your hand.
So.
First role person that they would like to take this person's questions first.
My name is just got that from Nikkei newspaper I have two questions. Please first.
Most of it in the AGM talking about shifting to offense mode.
So at the AGM.
He is now that I believe are changing his face from investors face to the opioid does face so semiconductors robotics and so on but other than the basement, what kind of bug tbd's that that my son does or the what do you think for the as an activity for the turning around.
And the other shifting to a deal for an smoked.
MRSA is for MRSA.
Is he in Vista.
I believe he is.
Entrepreneur.
He is the founder of Softbank.
And he is always are keeping his entrepreneurship in his mind.
But once you start business you also need due to the operation and you have to do the operation other than.
There will be many stakeholders view her about accountabilities you have to keep the governance and compliance.
For the business.
And he saying that that's a right hand side of the brain and left hand side of the brain and that is the operation is actually the left hand side brain work, but actually the enhancement of the body of the Softbank group I believe that he needs to use his right hand side of the brain and that it contributes more than most.
Oh, the growth of the business and he believes in that and we think that way too. So a hearing your question.
From in this two business person you may see him in that way I understand what you mean in the past few months or in the past one year or so and also his comments or explanations in AG in looks like so I understand but what.
He is doing he is very much focused and dedicated into a business what can we do.
What should she do.
That's something that the he's thinking around the clock 24 seven.
And though we are having our meetings almost every day and we are sharing his energy out from here, if somebody and that's a tremendous energy that the he's generating here so.
Of course that the investing activities and those will start the business by CIT didn't go company those kind of things can be one of the things that he may consider it but the.
Many things that can be done, but the very root or he himself is the entrepreneur ship I believe and based on the entrepreneurship that the he liked to access to the many areas and we are the operating side. We are the operating team that the way you would like to kind of bring it down to the business are based on his.
Ideas and they'll go and.
Chris that is somebody that's a big the big picture of answers, but that's the answer for your first question and my next question is the interest rate hike that they would like to ask you a vote.
They take.
And raising market or the.
Hey, Jason May have changed.
In our previous earnings you also mentioned that the rate from the floating to fixed that you have been already addressing the rate hike, but the even in the fixed rate, but when you refinance that debt or the payments of the.
He coupons, how do you addressing the current status of the rate hike.
Actually.
These days rate hike.
It's not the reason that we are changing from floating to fixed for example.
In regardless, so good or bad in the past 20 years <unk> been enjoying the very low lowest rate a sofa and me for example.
1987, I became a banker and started as a business person in the bank and he was a six 5% for the long prime rate and the pension was 5.5% or two 6% because I joined a trust bank. So those are the numbers that I remember.
And compared to that the 20% in the past at the yes. This rate is almost nothing so that the changing to the vote floating rate, maybe we can take advantage of 10 basis or the 20 basis, but that's not that financing activity. Because you are a 30 person.
<unk> is a business we are pursuing are as a company. So we always.
Tried to take all the opportunities for the financing as much as it's supposed to go that's the kind of the way we are thinking for financing activity as a result, our when.
When we see the rate hike.
Financial policy.
Has actually aligned with this movement, we don't know for the future once that that goes on and on and then the other there are some time or that we may see some decrease in the rate does well and what we should do is something that we should consider when the time comes but the 30 years to 50 years, that's a kind of a long term.
That we being with this rate environment and I don't believe we need to rush at this moment week in stroke and that foreign exchange is a big concern, but the way you would like to pay a close attention to that and but at the same time, whether we can find those win win it but we want to find us Uh huh.
I don't care I don't consider a much because we have confidence he no credit in the us the balance of the company and the state does help such us it's I.
We believe that we would be able to raise when it is necessary.
Yeah.
Yeah.
So you have a cash cause prudent cash position. So that you don't need to depend on the refinance of the debt is that what you mean no. The bond market itself is functioning very well at this moment, so that when that did them showing the timing.
For example, domestic Bose I believe we have a full access to the domestic market gone to market for the foreign bonds.
About a year ago.
The financing cost was all about 10%.
In such a circumstance.
We just need to change the leasing market in those case, usually just shift towards domestic and the raise in the domestic market. So that's the kind of operation are that the weekend.
Ah study.
But the rate itself.
Because right now the things that we've already raised.
Mainly are the fixed so that we don't need to see the change of the rate then going forward. When you eat when the maturity comes in when you financing comes then that's going to be using a new rate. So a little by little we may having some impact from the rate hike, but the majority is actually diversified though.
10 years, so it's not that the big change will occur in one year or two you when it comes to the global bonds.
If the rate is high we don't need to do that global bonds, but I also need to see the deposit and loan balance. So we have six almost six studio and you're in cash and 80% are managed under U S dollars and they're looking at the ear of the V. S. They'll lose akshay is very high.
And so that we're able to net out of those.
So that the considering that brothers.
I don't see any big issues for the management of such cashes.
Thank you very much next question from before.
Yeah.
Thank you for taking my questions I have to ask Shelly first about armor and all I I P. O preparation is going well you mentioned, but the timing and no.
<unk> stack or well anything could you give us a little bit more color. Please.
Yeah.
Who.
Oh, you're from Bloomberg.
Sorry, I cant Shay.
I'm not allowed to share more.
Forgive me.
But I don't think it's far all right when you get more information.
Questions for Neff neat about vision fund investment plans.
May I ask how much money is left at vision fund two to spend I see in the slide that it there's a section in the slide it says total dry powder to invest in 19 billion plus could you clarify what this figure is thank you.
Yes. Thank you for the question.
So the 19 billion figure covers the vision fund one vision fund two and a lot of time funds.
For vision fund two the total commitments are 60 billion.
And as you see in the acquisition cost is 51.5 billion. So we have a you know over 8 billion.
Available capital in vision fund two to invest.
Thank you and I'm sorry could you also elaborate maybe a little bit on the pace of investments going forward.
Since you started investing now thank you sure there's good to phone showed in one of his slides.
The pace is definitely increasing given some songs comments.
June shareholder meeting, but we're going into offense and you can see.
In the June quarter, we spent close to $1 billion of investing in vision fund two so it's more than the prior quarters, but at the same time the bar for investing is very high there has to be investments that meet our targeted thresholds and they have to be companies that.
Our focused on next generation AI with high growth potential.
Yes, it is just that.
You got to have a dana thank you other questions.
Then I would like to take a question from the Black jacket person. Please in the front row.
My name is Yamaguchi from mine Eugenius paper so back in May.
N P announced the downgrade on you and can you give us any comments about that and another question is about.
I'm Buddy issue has been increasing but the how you compare with other peers. So why did you mark up the by the Asian Please yeah.
Yes, the first question.
Validation.
Sorry, the first question about the great credit rating of the S. N P.
So that's up to the rating agency to provide the rating our index, but this time they are a highlight or the interpretation is different from what we.
Understand.
That has something that the we do not agree and that we'd be keeping a dialogue with S&P simply put.
I said amongst the assets or the asset diversity.
Vacation they see S. N P C as negative would be if we have a ratio of 50% be those 40 public securities among other than it does it's a because we have monetize alibaba share and that became sketch and the cash I thought is a safer than a public securities. That's migrations are that are giving.
To them and the depth of it but the issue is.
It does not have a cash item. So that I think there are many ways to understand the company, but are we how 'bout about six junior and you end up the cash with us so that.
It's not that we have to all be forced to sell are the securities to put the money, but we just tried to get safer by divesting. The Chinese athletes. For example are therefore that the we believe this is something that we are not forced or anything but just trying to.
To avoid the risks after the events of the downgrades are we being keeping their communications and dialogue with senior members of the the agency.
Next day of that announcement of downgrade actually E. Many of the credit analyst.
Issued a reports.
And made a comment that they agree with our interpretation, which was a very.
Good news or the good reports about though we don't want to make any misunderstanding in between two parties. So that we would like to keep a good dialogue with the company and for your next question the valuation of them now.
No Pete.
So it's good to sunset, we cannot comment too much on arm.
The quiet period.
But in terms of the arm valuation just like all of our portfolio companies, we look at a number of factors.
We look at the multiples of comparable companies. So the comparable companies to arm their multiples have expanded and then the performance of our it has shown very strong topline growth as well as EBITA performance. So in light of that we took a small a markup on the.
Arm valuation in the June quarter.
Sure.
Thank you very much.
Any more questions from the floor.
Well know from Yomiuri newspaper.
Going forward, what's your view Goto song.
I understand your view.
Yeah.
In short term, but going forward.
Risk environment.
And.
Market trends and also I P O we should've come.
Sooner rather than later you indicated and ones is this data.
You expect a increase in by the Asian.
So again all in all what's your view.
Going for Ida.
As an investment company.
For our stake holders.
You should do what we need to do for the state quarter from that perspective for example in event of I P. O. If it takes place.
Sim.
And if everything goes smoothly and arm a valued school up and does he have more room for investment.
And.
That capacity.
How much.
We can invest in a safe manner, we should have more down and start your money of it.
Of course, we need to fulfill all our accountability at the same time, we need to do execution, we need to look at the good side and Bath side, all the environment for example, Nikkei average.
Is.
Through points. So they just out any M, which is comfortable for us but of course, we need to keep watching how the stock market goes.
To make sure that there'll be a ready for any contingencies.
Yeah.
How much sensitivity should we have and how much safety net we should have.
And then how much can we invest.
We are going into a positive cycle and of course, we want to have keep having offensive mode, but also be need you.
Be defensive of law for some time.
At certain point, we may take a different stance, but for the time being we don't think of you should have changed our policy drastically.
Any other questions then we'd like to take a second row from the front the gentleman. Please.
Most of them are from my knee genius paper.
Yeah.
On the page nine no financial report that I would like to have more color page nine no financial report in the Middle holding company a business loss.
Yes.
Second column.
T mobile share.
You will have on our rate too.
Purchased those shares are in the northeast thousand and 53, you have the rights to such as Ah in free but you have lost recording here and there that city, but if I understand but can you give us a little bit more color on this.
Yes.
So for this option is every quarter, we value and a fair value basis.
And.
It's been to me they did already.
So simply put.
Compared to the previous calls that this quota share price has declined as a result by the patients has decreased.
The Buddy has degrees sorry and right.
Options race is is the condition is that the full 500 mm 150, the others. Although I believe about 45 days. So once that there you see the decline of the share price in the body is going to decrease as well. So it's a kind of a period during this quarter that the when you see the share price down then the Baidu is the decrease.
So that is why that we called the last this time.
Then he says do you have a race to obtain Oh I can tell you, but do you need to acquire.
We have our rights to be able to receive being three so that the if the once that the conditional needs achieved do we have a right to acquire.
Korea are this much of those shares are in free. So this rating in our financial report there are some other writing us they'll page 25 he says.
Uncertain conditions is this same thing that's different things.
That portion is a contingent value rights.
That's a different things than that that one so that's a separate thank you then page 59.
In the middle.
Yes.
So that the fair value of contingent consideration is what you have said about the rate and also after then.
Or what page that you have a footnote on that I couldn't find the page of the financial report.
The footnote.
Fair value of contingent consideration details is needs to referred to.
Bronco, the two and I couldn't find that bucket.
So they may they may come back to you we set pages number pages.
What I didn't understand is in free you can acquire those shares in freedom, but still you're recording this much and every call that you're recording so that Oh, though that you are getting them free Budd.
You have the recording of those four that much that's your explanation.
Every quarter we value.
We ticked up value and sometimes by the increase sometimes decrease and this time a recording of those because of that thank you. Thank you.
Any more questions from the floor.
Yeah.
So we are going to take the last question from the floor now.
Morita from Toyo Kids I I have just one question.
Yeah.
And your relationship between the latest investment versus investment policy for example in logistics three companies and logistics and.
Tractable.
AI powered.
We will review the policy so I wonder if.
Of course, you want to have a defense and offense ensure muscle financial policy, but when it comes to investment.
Do you still are being aggressive with ora.
More conservative financially, yes, we want to be defensive as well as the offensive I'd be having for example investment committee, we have heated discussions at investment Committee.
So three years ago for example at investment Committee discussion was probably focusing on speed.
And maybe.
Now if.
The time, when we should have take a look at the more indeed, telus and focusing and I is something that all the value. This time.
In the past he made.
We might say that our we invest in AI, but that there are some companies that they are not really doing a I think.
From your perspective.
When it comes to investment stance, what's changing what if any if you have changed any investment stance.
Where are you with a couple of songs.
You mentioned tractable.
We're very excited about that investment.
It is definitely leveraging AI.
To make better decisions with respect to vehicles.
So it's not necessarily a focus on logistics or any particular sector. If the focus is really on mid to late stage next generation AI focused companies with high growth potential at valuations that we believe are attractive.
Thank you very much.
So at the moment policy. It remains the same but the song you make sure that you focus on the AI, where the more attention to details yes, yes. Thank you.
Thank you very much.
Next we would like to take a question from zoom, but defense.
To avoid any echoing.
Oh please.
Turned off all of the other like the guests to prevent any inklings and also if you are in.
Zooming Japanese please ask questions in Japanese and now we would like to ask Mr. Nagao from Newsweek's. Please ask your questions.
Yes. This is Doug I'll go after them and you're speaks can you hear me. Okay. Yes. Please go ahead.
Thank you.
Vision fund.
One questions for the vision fund is the commitments total amount funds to commitment total in our previous earnings by about <unk> 60, a 56 billion and this time 60 videos, so that looks like commitment amount has increased.
So about 4 billion has increased what is the.
Grounds for increasing this amount and also you've been running some restrictions in the fund as well and head counts after the restrictions has.
That being stays the same but still start restart the investment activities. That's my first question and for the second question Robotics.
Oh and the logistics that you mentioned earlier. So there are three companies you gave us as an example for the investments and I believe this came from that.
U S b juice, our investments I would like to ask about this but the you have investing they'll just sticks robotics quite a large yeah, but BD on a kind of a size and a any condo come on background for those three companies for the investments yes. Thank you so first.
Questions regarding mutual funds.
The commitment amount increase.
Yes, Inc.
Hussey increased of it yeah, but the visuals on two actually we don't sit then your upper limit for the commitments are yet so that when we see any new.
Pipelines.
And when we see more and more pipelines comes in then we would like to flexibly increase so that you may see the same kind of trend in the future again.
And for the restructuring Sendai impactful the investment policy isn't happening to would you. Please cover that.
So youre correct, but we've had two rounds of restructuring.
One was set.
September of 'twenty, two and then we had another one in the <unk>.
One quarter, we now believe we are right sized the organization for.
For the investment opportunities that we see ahead.
This was the right size of the organization both on the investing side and the <unk>.
Functions.
It's again you know what.
Your next question.
The logistics area.
It's not that the we especially looking into logistic area and focused and look for the potential companies anything like that but that's the way we see the growth of the business in the AI and so on especially for the thing about the peaks in the books I agree we have.
The investment in those companies in the past and now that the we see that the more a deeper understanding of such companies in this AI. Our introduction trend then that we believed we would.
We'd like to hear about where you want it to have a good communication with the management of those two and decided to have the investments in those two companies. So that once again, it's not that we think we think of ourselves to these fixed us area. There are many other pipelines in other areas as well for the coming quarter. So about.
Yes, that's the way you would like to ask this and look for the good companies for the AI companies and every time that when the time comes that we would like to update you. Yes. Thank you very much.
Thank you very much.
In the interest of time and thought it was the last question V E T.
At this time.
Again, thank you very much. This concludes the Softbank Group Corp earnings results briefing for the three months period ended June 30, 'twenty to 'twenty three the video footage of this briefing will be uploaded on our corporate website.
<unk> you very much once again for joining the Softbank Group Corp earnings results briefing for the three months period ended June 30, 2023.
Okay.