Summary of Earnings Results Briefing FY2021

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Date Wednesday, May 11, 2022 4:00 pm - 5:30 pm
Speakers SoftBank Corp.
Junichi Miyakawa (President & CEO)
Jun Shimba (Representative Director & COO)
Yasuyuki Imai (Representative Director & COO)
Kazuhiko Fujihara (Board Director, Executive Vice President & CFO)

Summary

At the earnings results briefing, Mr. Junichi Miyakawa, President & CEO of SoftBank Corp., discussed the consolidated results for FY2021 and the consolidated results forecast for FY2022. In addition, Mr. Miyakawa discussed tour plan beyond FY2023 and initiatives in each business segment.

Consolidated Results for FY2021

  • Revenue and incomes for FY2021 both surpassed the forecasts at the beginning of the fiscal year, reaching new historical highs.
  • Revenue was ¥5,690.6 billion, up 9% year on year.
  • Operating income was ¥985.7 billion, up 2% year on year. Increases in income in the Enterprise segment and Yahoo! JAPAN/LINE segment more than offset the decline in Consumer segment income, which was impacted by mobile service price reduction.
  • Net income attributable to owners of SoftBank Corp. was ¥517.5 billion, up 5% year on year.
  • The year-end dividend is scheduled to be ¥43 per share as the forecast at the beginning of the fiscal year, bringing the annual dividend to ¥86 per share.

Consolidated Results Forecast for FY2022

  • For FY2022, we are forecasting revenue of ¥5.9 trillion, operating income of ¥1 trillion or more, and net income attributable to owners of SoftBank Corp. of ¥530 billion or more. We upwardly revised our medium-term financial targets announced in August 2020 and expect to achieve year-on-year increases in revenue and incomes.
  • Looking at operating income forecasts by segment, operating income in the Consumer segment is expected to decrease by 25% year on year, mainly due to factors such as the impact of mobile service price reduction. Meanwhile, operating income in the Enterprise segment is expected to increase 17% year on year as this segment continues to grow steadily. Moreover, the consolidation of PayPay Corporation, which is scheduled to be implemented during FY2022, is forecast to have a positive impact.*1
  • Capital expenditures*2 are forecast to increase 9% year on year to ¥430 billion, to accelerate investment for further 5G deployment.
  • Adjusted free cash flow*3 of ¥600 billion is expected to be generated due to activities such as securitization of sales receivables.
  • The annual dividend per share will continue to be ¥86, maintaining a high level of shareholder returns.

Out Plan for FY2023 and Beyond

  • In FY2023, SoftBank Corp. intends to offset the negative impact of mobile service price reduction with positive impacts such as decrease in depreciation and network operation cost reduction. We aim to deliver earnings growth on an operating income excluding income associated with the consolidation of PayPay Corporation basis, through growth in the Enterprise segment, Yahoo! JAPAN/LINE segment, and other areas.
  • From FY2024 onward, mobile service price reduction will have a much smaller impact on reducing income. We will implement measures to expand revenue and reduce costs, with the aim of driving further growth in income.
  • In FY2023 and beyond, we expect to significantly reduce capital expenditures*2 following the accelerated 5G investment we plan to make in FY2022.
  • Adjusted free cash flow*3 is forecast to remain at a steady level of \600 billion from FY2023 onward.

Initiatives in Each Business

Overall strategy

  • SoftBank Corp. will work to maximize Group synergies based on its solid business foundation.

Consumer segment

  • Number of cumulative smartphone subscribers reached 27.58 million at the end of FY2021, an increase of 6% from the end of the previous fiscal year. Net additions of subscribers, which had declined at the beginning of the fiscal year, significantly recovered toward the fiscal year-end.
  • Looking ahead, we will accelerate collaboration between the mobile business and non-mobile Group services. Efforts will be made to spur growth through a positive cycle driven by synergies.
  • In practice, the e-commerce of Z Holdings Corporation, the cashless payment service PayPay, and the electricity service in the Consumer segment have grown substantially in recent years through customer referrals from the mobile business. Meanwhile, in the mobile business, collaboration with services within the Group has led to positive effects in terms of both retention improvement and new subscriber acquisition.
  • Going forward, we will remain focused on accelerating synergies and increasing smartphone subscribers, as smartphones are the gateway to all our services. We will strive to hit our target of cumulative smartphone subscribers of 30 million at the end of FY2023.

Enterprise segment

  • For FY2021, Business solution and others revenue increased by 9% year on year, indicating continued steady growth.
  • Looking ahead, we will seek to further expand business with customer segment strategies according to the size of companies.
  • In the large corporate market, where we already serve many customers, we will work to expand transaction value per enterprise by providing comprehensive solutions for customers' pain points.
  • From FY2022, we will implement measures in earnest to develop the small and medium-sized enterprise market, where we previously did not have very much business. We will collaborate with Group companies that possess strengths in this market, with the aim of enlarging our sales channels efficiently.

Yahoo! JAPAN/LINE segment

  • For FY2021, EC merchandise transaction value increased by 11% year on year.
  • Going forward, we will strive to expand our economic field by strengthening measures that encourage cross-use of services within the Group.

Cashless payment service PayPay

  • Number of cumulative registered users reached 46.79 million at the end of FY2021. The number of payments was 3.6 billion. Gross merchandise value (GMV) was ¥5.4 trillion, up 67% year on year.
  • PayPay Corporation posted revenue of ¥57.4 billion on a standalone basis in FY2021, 1.9 times year on year.
  • Going forward, PayPay Corporation will work to develop a multi-layer business, targeting high income. The company will continue to expand payment system fee revenue, which is the foundation of its income. Additionally, it will diversify its revenue sources by upgrading and expanding value-added services for PayPay merchants. Moreover, by stepping up collaboration with financial services within the Group, PayPay Corporation will pour its energy into loans, insurance, asset management and deferred payments, among other services.
[Notes]
  1. *1
    The impact of PayPay consolidation includes estimated amounts of gain or loss on step acquisition of PayPay Corporation (“PayPay”) by SoftBank Corp. (“the Company”), operating income/loss of PayPay after making it a subsidiary, and amortization of identifiable intangible assets recognized as a result of making it a subsidiary. PayPay is expected to become a subsidiary of the Company upon the condition that both the Company and Yahoo Japan Corporation exercise all of their preferred stocks in PayPay. The exercise of the conversion right is dependent on a certain agreement being made among the shareholders of PayPay.
  2. *2
    Capital expenditures here refer only to capital expenditures in the Consumer segment and the Enterprise segment. Acceptance basis. Capital expenditures exclude such expenditures related to rental mobile phones for enterprise customers and shared equipment (contributions by other operators) and the impact of adopting IFRS 16.
  3. *3
    Adjusted free cash flow = free cash flow + (proceeds from securitization of installment sales receivables - repayments thereof). Excludes A Holdings Corporation (“AHD”) and ZHD Group's FCF, loans to Board Directors, and impact of PayPay consolidation in FY2022. Includes dividend payments from AHD.