SoftBank, in the December quarter, achieved its most substantial gain in nearly three years at its flagship tech investment arm, the Vision Fund, driven by a rebound in technology company valuations. Here’s a breakdown of SoftBank’s performance against LSEG estimates:
- Net sales: 1.77 trillion Japanese yen ($11.9 billion) versus the expected 1.8 trillion Japanese yen.
- Net income: 950 billion Japanese yen versus the expected 196.5 billion yen.
The Vision Fund reported a gain on investment of 600.7 billion Japanese yen, marking a continued recovery from record losses in the previous fiscal year. This gain is the highest since the March 2021 quarter.
Notably, SoftBank achieved its first quarterly profit in five quarters, marking a turnaround from four consecutive losses.
In the prior fiscal year ending in March, the Vision Fund faced challenges, posting a record loss of around $32 billion due to a decline in tech stock prices and setbacks in some Chinese business ventures.
The Vision Fund has shown positive results in the last three quarters, with rising valuations from key investments in Didi, the Chinese ride-hailing app, and ByteDance, the owner of TikTok.
SoftBank founder Masayoshi Son announced a shift to “defense” mode in 2022, slowing investments and adopting a cautious approach. However, in June, Son indicated a move to “offense” mode, expressing excitement about the potential of artificial intelligence technology, an area where the Vision Fund has investments, including in China’s SenseTime.
In the December quarter, SoftBank gained $5.5 billion from the sale of shares of its majority-owned chip designer, Arm, which went public in the U.S. last year. SoftBank’s CFO, Yoshimitsu Goto, highlighted Arm’s significant contribution to the global AI evolution.
SoftBank has undergone a strategic shift from being “Alibaba-centric” to an “AI-centric” portfolio. The company has reduced its stake in Alibaba, with the Chinese giant accounting for nearly zero percent of SoftBank’s assets at the end of the December quarter, down from 50% at the end of December 2019. In contrast, Arm’s contribution to SoftBank’s assets has increased from 9% to 32% during the same period.
As the lock-up period for Arm shares post-IPO expires in March, there is speculation that SoftBank might consider a buyback of its own shares by selling Arm stock. Goto emphasized SoftBank’s reduced investment exposure to China, indicating a shift in the company’s focus.
