Net sales: 1.77 trillion Japanese yen ($11.9 billion) compared to an expected 1.8 trillion Japanese yen. Net income: 950 billion Japanese yen compared to 196.5 billion yen expected. The Vision Fund achieved a gain on investment of 600.7 billion Japanese yen, marking a significant recovery from the previous fiscal year’s record losses. This gain is the largest since the March 2021 quarter when the Vision Fund recorded a 3.59 trillion yen gain. SoftBank’s net income also marked the company’s first quarterly profit after four consecutive losses. The flagship tech investment arm endured challenges in the previous fiscal year, resulting in a record loss of around $32 billion due to a decline in tech stock prices and setbacks in some of the business’ bets in China. The Vision Fund has seen gains in the last three quarters. SoftBank also noted increasing valuations from two major firms in which the Vision Fund invests, Chinese ride-hailing app Didi and TikTok owner ByteDance. In the June quarter of 2023, the Vision Fund registered its first investment gain in five consecutive quarters, signaling early signs of renewed growth coinciding with recoveries in technology stock prices. In 2022, SoftBank founder Masayoshi Son announced that the company would transition into a “defense” mode, slowing the pace of investments and adopting a more prudent approach. In June, Son indicated a shift to “offense” mode, expressing enthusiasm for the potential of artificial intelligence technology. The Vision Fund’s exposure to AI is through investments in companies such as China’s SenseTime. SoftBank stated in the December quarter that it recorded an investment gain of $5.5 billion following the sale of shares of its majority-owned chip designer Arm to one of the company’s wholly-owned subsidiary. Arm went public in the U.S. last year. The British firm was acquired by SoftBank in 2016 for approximately $32 billion, and its initial public offering valued the company at over $50 billion. Ahead of the earnings report, SoftBank’s Tokyo-listed shares closed 11% higher, following Arm’s release of earnings and a financial forecast that exceeded market expectations. SoftBank CEO Masayoshi Son has been considering various options for chipmaker Arm after Nvidia withdrew its acquisition bid for the company. SoftBank’s Son has consistently promoted Arm’s potential to be a major player in artificial intelligence, a view that was echoed by the company’s chief financial officer Yoshimitsu Goto. “Arm is the biggest contributor to the global AI evolution,” Goto stated during an earnings presentation on Thursday. Investors are waiting to see what SoftBank will do in March when the lock-up period, during which the company is barred from selling Arm shares post-IPO, expires. Jefferies equity analyst Atul Goyal mentioned in a note on Thursday that once the lock-up ends, SoftBank could potentially facilitate a buyback of its own shares by selling stock in Arm. Goto mentioned that SoftBank has “gone through a shift from Alibaba to an AI-centric portfolio.” SoftBank rose to become one of Japan’s largest companies thanks to Son’s early investment in Chinese e-commerce giant Alibaba in 2000, which experienced substantial growth in subsequent years. SoftBank has recently been reducing its stake in Alibaba. Goto disclosed that Alibaba made up nearly zero percent of SoftBank’s assets at the end of the December quarter, down from 50% at the end of December 2019. Meanwhile, Arm’s portion of SoftBank’s assets increased from 9% to 32% during the same period. Goto also indicated that SoftBank has decreased its investment exposure to China. “When we had a lot of Alibaba shares, we were China-centric, but now we have gone through the shift,” Goto said.
