SoftBank Q1 FY 2024 Earnings Report

SoftBank Group posted a 1.9 billion yen ($12.9 million) gain on investments in its technology arm Vision Fund in the company’s fiscal first quarter ended in June, returning to profit.

Gains at some Chinese companies in SoftBank’s portfolio, including TikTok owner ByteDance, helped offset losses at other firms such as AutoStore and Symbotic.

However, the Vision Fund segment as a whole posted a loss of 204.3 billion yen, after being profitable in the same quarter last year. The segment total takes into account performance other than investment, such as administrative expenses, as well as gains and losses attributable to third-party investors.

The Japanese giant also announced that it will buy back up to 6.8% of the company’s available shares, for a maximum amount of 500 billion yen ($3.4 billion).

In the year-ago quarter, SoftBank reported a gain of 159.77 billion yen in its Vision Fund. In the March quarter, SoftBank reported a loss of 57.53 billion yen in its flagship technology investment arm.

SoftBank posted its first annual gain since 2021 at its Vision Fund in the fiscal year ended in March, benefiting from a rally in technology stocks and some of its largest holdings.

The Vision Fund’s recent success is also largely due to the success of the initial public offering of chipmaker Arm last year, in which SoftBank owns about 90% of the shares.

However, SoftBank is once again facing volatile public markets. On Monday, SoftBank shares fell nearly 19% in a day, amid a broader decline in Japanese stocks, fueled by a Bank of Japan interest rate hike last week.

However, major Japanese indexes rebounded on Tuesday. But global markets remain volatile as investors remain concerned about the state of the global economy and high valuations, partly driven by technology stocks.

SoftBank, itself battered by bad bets in recent years, is trying to position itself to investors as a key player in the AI ​​boom. The company’s management has pointed to its investments in companies like Arm and self-driving car startup Wayve as signs that the Japanese giant is poised to capitalize on AI’s growth.

SoftBank founder Masayoshi Son, who has been out of the spotlight for some time, returned this year to outline his vision of artificial intelligence, which he says will be 10,000 times smarter than humans within 10 years.

SoftBank’s share buyback announcement comes amid mounting pressure from shareholders concerned that the Japanese company’s market capitalization is significantly lower than the value of the assets it has invested in or owns.

Stock buybacks are a way to potentially increase a company’s stock price.

Investment firm Elliott Management has rebuilt its position in SoftBank and is pushing the company to begin a share buyback program, Vscek reported in June.

For its part, SoftBank said it “has decided to buy back its shares as part of its shareholder return initiatives.”

SoftBank Group’s June quarter net sales rose 9.3% year-on-year to 1.7 trillion yen, beating analysts’ expectations. Net profit came in at 10.5 billion yen after a loss of 316.2 billion yen in the year-earlier quarter.

SoftBank was helped in part by a $235.7 billion gain on its investments in Alibaba shares and a $179.1 billion return on T-Mobile shares.

The tech conglomerate grew into one of Japan’s largest companies thanks to Son’s initial bet on Chinese e-commerce giant Alibaba in 2000, which boomed in the years that followed. The company has since trimmed its stake in Alibaba as it looks to use the money to fund bets on artificial intelligence.