Main Q&A at Earnings Investor Briefing
for Q3 FY2024

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Date Monday, February 10, 2025
6:00 pm - 6:50 pm
Speakers SoftBank Corp.:
Kazuhiko Fujihara (Board Director, Executive Vice President & CFO)
Osamu Akiyama (Vice President, Head of Strategic Finance Division)
Wataru Onoguchi (Head of Finance and Accounting Division)
Yudai Sasaki (Deputy Head of Corporate Planning Division)

  • How do you evaluate the performance of each segment up to Q3?

    All segments performed well. The Financial segment performed particularly strong, with a progress rate of 129.9%, exceeding our expectations. The top line grew steadily, and cost rationalization advanced. The Consumer, Enterprise, Distribution, and Media & EC segment also performed well, resulting in profit growth. Each segment effectively fulfilled its role.

  • What factors within each segment are driving the expected profit growth for the next fiscal year?

    We will provide details during the FY2024 earnings announcement in May, but our current thoughts are as follows. For the Consumer segment, we anticipate profit growth driven by mobile revenue growth due to stable ARPU and smartphone net additions. The Enterprise segment aims to maintain its momentum to achieve double-digit growth in Business solution and others revenue and in operating income, as stated in our current Medium-term Management Plan. The Distribution segment is progressing well. The Media & EC segment should focus on profit growth, overcoming one-time factors from this fiscal year. The Financial segment still has significant growth potential, mainly driven by the revenue growth of PayPay Corporation (“PayPay”). Generative AI, where we are making upfront investments, presents unprecedented opportunities, so we need to ensure we can invest adequately when necessary by first focusing on strengthening our core businesses.

  • Is it feasible to achieve a net addition of 1 million smartphones annually, based on the current progress up to Q3? Is there a need for aggressive promotions in Q4?

    We are on track to achieve the target and do not foresee the need for extreme sales promotions in Q4 at this point. We remain committed to achieving the net addition of 1 million smartphones as outlined in our Medium-term Management Plan.

  • PayPay has been performing well, but costs seem to be more contained than expected. Will expenses increase in the coming fiscal years?

    This fiscal year, the balance between revenue and costs was better than expected. In the coming fiscal years, PayPay may incur additional expenses to further grow PayPay Securities Corporation and PayPay Bank Corporation. However, given the significant revenue growth opportunities for PayPay, we expect profit growth.

  • How do you foresee generative AI investments and their impact on profits in the coming fiscal years?

    Due to the meticulous development and training of our in-house computing infrastructure, as well as the Sakai data center project, we expect generative AI-related R&D and upfront investment to increase in FY2025 compared to FY2024. We expect some increase in “Others” expenses but will continue to target the company-wide operating income of ¥1 trillion. During the period of the next Medium-term Management Plan starting FY2026, we foresee increased costs due to the expansion of the generative AI business, concurrently with corresponding revenues from these investments.

  • Assuming the Sakai data center becomes operational in FY2026, when will depreciation expenses significantly rise?

    Significant depreciation expenses will start in FY2026. However, some depreciation on buildings and additional equipment will begin in FY2025, albeit at a smaller scale compared to FY2026.

  • Will the proceeds from the Bond-Type Class Shares issued thus far be sufficient to cover the generative AI investments in the next fiscal year?

    Bond-Type Class Share is a unique capital-raising method that aligns well with our company's needs. We expect the proceeds already raised, including ¥200 billion from the recent Series 2 issuance, to cover the investments. Our liquidity remains strong, and our adjusted net leverage ratio (excluding LY Group, PayPay, etc., and securitization of installment sales receivables) has improved to approximately 2.3 times by the end of the third quarter, indicating some financial flexibility.

  • How will the business of “SB OpenAI Japan” affect SoftBank Corp.'s financial performance in the upcoming fiscal years?

    As discussions are still ongoing, we will provide details once conclusions are reached. While there are various considerations in structuring the joint venture, we aim to make decisions that do not negatively impact our profit growth or expected dividend levels in the next fiscal year.

  • Given that 1,000 personnel will be deployed to “SB OpenAI Japan” while SoftBank Corp. holds only a 25.5% economic interest, are there any concerns about the balance of investment returns?

    As stated during the current Medium-term Management Plan, our primary focus is on net income, and we will proceed with investments while ensuring they are justified by the expected financial returns.