Analysis of Operating Results

Consolidated Results

Revenue

  • For the three months ended June 30, 2020, revenue increased by ¥7.8 billion (0.7%) year on year to ¥1,172.6 billion. Revenue decreased by ¥32.6 billion in the Consumer segment due mainly to a decrease in revenues from sales of goods and others. Revenue increased by ¥8.1 billion in the Enterprise segment, decreased by ¥6.6 billion in the Distribution segment, and increased by ¥35.2 billion in the Yahoo segment.

Operating income

  • For the three months ended June 30, 2020, operating income increased by ¥11.1 billion (4.1%) year on year to ¥279.9 billion. Operating income decreased by ¥16.4 billion in the Consumer segment, but segments other than Consumer operating income growth was secured mainly in the Yahoo segment and the Enterprise business which had a double-digit growth. This resulted in increases of ¥3.1 billion in the Enterprise segment, ¥0.2 billion in the Distribution segment, and ¥14.5 billion in the Yahoo segment. Operating income under Others increased by ¥10.9 billion. This increase was mainly due to the recording of an operating loss in the same period of previous year related to PayPay Corporation, which was accounted for as a subsidiary until May 14, 2019 in previous fiscal year.

Net income attributable to owners of the Company

  • For the three months ended June 30, 2020, net income attributable to owners of the Company decreased by ¥12.7 billion (7.7%) year on year to ¥152.1 billion. This was mainly due to a decrease in gain on sales of equity method investments of ¥5.5 billion, and an increase of ¥3.6 billion in share of losses of associates accounted for using the equity method, while there was an increase in operating income.
    Also, for the three months ended June 30, 2020, net income attributable to non-controlling interests increased by ¥8.2 billion (104.5%) year on year to ¥16.0 billion, mainly due to an increase in earnings at Z Holdings Group.

Adjusted free cash flow*1

  • In the three months ended June 30, 2020, adjusted free cash flow was positive ¥179.2 billion, an increase of ¥52.7 billion year on year. This mainly reflects an increase in the amount of funds procured through the securitization of installment sales receivables.

[Notes]
  1. *1
    Adjusted free cash flow = free cash flow ± total cash flows relating to non recurring transactions with SoftBank Group Corp. + (proceeds from the securitization of installment sales receivables ‐ repayments thereof)
  2. *2
    Excludes Z Holdings Group and the impact of adopting IFRS 16
  3. *3
    Sum of Z Holdings' FCF and dividend payments from Z Holdings to SoftBank Corp. (FY19 Q1: ¥5.4 bn, FY20 Q1: ¥18.8 bn)
    (including impact of IFRS 16 in Z Holdings)

Revenue by segment

Consumer segment*4

  • Consumer segment revenue decreased by ¥32.6 billion (5.0%) year on year to ¥625.4 billion. Mobile communications revenue decreased by ¥11.4 billion (2.7%) year on year. This decrease was mainly due to a decline in average unit price due to discount programs for price plans of the SoftBank brand, and increases in the number of Y!mobile and LINE MOBILE subscribers, despite an increase in smartphone subscribers mainly in the Y!mobile brand.
    Broadband revenue increased by ¥2.2 billion (2.3%) year on year. This increase was mainly due to an increase in subscribers to the SoftBank Hikari fiber-optic service. Electricity revenue increased by ¥7.6 billion (67.5%) year on year. This increase was mainly due to an increase in subscribers to the Ouchi Denki (Home Electricity) service.
    The decrease in revenues from sales of goods and others was mainly due to a decrease in mobile device sales reflecting decreases in sales volume of mobile devices and the unit prices.

[Note]
  1. *4
    In the three months ended June 30, 2020, Electricity, which was previously included in Revenues from sales of goods and others is presented separately due to its increase in materiality, and thus the breakdown for the three months ended June 30, 2019 has been restated accordingly.

Enterprise segment

  • Enterprise segment revenue increased by ¥8.1 billion (5.2%) year on year to ¥162.5 billion. Mobile revenue increased by ¥4.0 billion (6.0%) to ¥71.9 billion, fixed-line revenue decreased by ¥1.8 billion (3.7%) to ¥47.3 billion, and business solution and others revenue increased by ¥5.8 billion (15.6%) to ¥43.4 billion.
    The increase in mobile revenue was mainly due to an increase in smartphone subscribers.
    The decrease in fixed-line revenue was mainly due to a decrease in the number of subscribers to telephone services.
    The increase in business solution and others revenue was mainly from increased revenue from cloud services and security solutions atop growing demand for telework-related products due to the impact of the COVID-19 outbreak, along with increased revenue related to IoT products and others.

Distribution segment

  • Distribution segment revenue decreased by ¥6.6 billion (5.6%) year on year to ¥109.9 billion. This was mainly due to an increase in revenue from a special high demand of PCs and servers for enterprise customers in the same period of previous fiscal year.

Yahoo segment*5

  • Yahoo segment revenue increased by ¥35.2 billion (14.8%) year on year to ¥273.9 billion. Commerce revenue increased by ¥41.2 billion (25.0%) to ¥205.9 billion, media revenue decreased by ¥5.1 billion (7.0%) to ¥67.5 billion, and other revenue decreased by ¥0.9 billion (63.2%) to ¥0.5 billion.
    The increase in commerce revenue was mainly due to consolidation of ZOZO, Inc., an increase in shopping-related advertising revenue and an increase in revenue associated with an increase in transaction value in existing commerce services.
    The decrease in media revenue reflected a decrease in advertising revenue mainly due to a decline in ad placements centered on search advertising under the background of business sentiment deterioration, while there was an increase in display advertising revenue in connection with increased media service traffic and other factors due to the impact of COVID-19.

[Notes]
  1. *5
    In the three months ended June 30, 2020, the Z Holdings Group transferred certain service and subsidiary from the commerce business to the media business. In accordance with this change, the breakdown of commerce and media in revenue for the Yahoo segment for the three months ended June 30, 2019 has been restated.
  2. *
    SoftBank Corp. has adopted IFRS 16 from the fiscal year ended March 31, 2020
  3. *
    Transactions under common control are accounted for as if such transactions were executed by SoftBank Corp. and its subsidiaries on the later of the acquisition date of the transferred companies by SoftBank Group Corp. or the opening balance sheet date of the comparative period

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