SoftBank Earnings Call: Record Revenue, AI Focus

SoftBank Corp. ((JP:9434)) has held its Q4 earnings call. Read on for the main highlights of the call.

SoftBank Corp. recently held its earnings call, showcasing a mix of triumphs and challenges. The sentiment was largely positive, with significant achievements in revenue and operating income, surpassing mid-term targets ahead of schedule. The enterprise and media sectors showed robust growth, though the company acknowledged hurdles in net income realization, electricity sales forecasting, and churn rate. Notably, SoftBank is making aggressive investments in AI and technology to ensure long-term growth.

Record-Breaking Revenue Achievement

SoftBank Corp. reported a remarkable revenue of JPY6,544.3 billion, marking an 8% increase. This achievement allowed the company to meet its mid-term Management Plan goal of JPY6.5 trillion a full year ahead of schedule, underscoring the company’s strong financial performance.

Operating Income Growth

The company saw its operating income rise to JPY989.0 billion, a 13% increase that surpassed the JPY970 billion target set in the mid-term plan. This growth highlights SoftBank’s effective operational strategies and financial management.

Enterprise Business Expansion

SoftBank’s enterprise business revenue experienced a significant 27% year-on-year growth, indicating a clear trajectory towards achieving JPY1 trillion in revenue from this segment alone. This expansion reflects the company’s strategic focus on strengthening its enterprise offerings.

Strong Performance in Media and E-commerce

PayPay, SoftBank’s e-commerce platform, reported a 23% increase in gross merchandise value, reaching JPY15.4 trillion. This marks the second consecutive year of profitability for PayPay, with a consolidated EBITDA of JPY45.6 billion, showcasing the platform’s growing influence in the market.

Advancements in AI and Technology

SoftBank completed an AI data center at the Sharp Sakai plant for JPY100 billion and developed Sarashina mini, a high-performance AI model with 70 billion parameters. These advancements demonstrate SoftBank’s commitment to leading in AI and technology innovation.

Dividend Consistency

The company maintained its dividend at JPY8.6 per share, consistent with previous commitments, reflecting its stable financial policy despite market fluctuations.

Net Income Shortfall

Despite an 8% increase in net income to JPY526.1 billion, SoftBank fell short of expectations due to a valuation loss on a portfolio company. This shortfall highlights the challenges in achieving net income targets.

Challenges with Electricity Sales

SoftBank faces difficulties in forecasting electricity sales in the consumer business, primarily due to unpredictable weather conditions, which pose a challenge for revenue growth in this sector.

Price Increase Concerns

The inflationary environment raises concerns about maintaining flat dividends and the potential need for price increases in telecommunications, which could impact consumer pricing strategies.

Churn Rate Concerns

An increased churn rate, particularly in SIM-only contracts with Y!mobile, presents a challenge for SoftBank. This rise is attributed to short-term conversions, indicating a need for strategies to improve customer retention.

Forward-Looking Guidance

Looking ahead, SoftBank has revised its revenue forecast upward by JPY200 billion for FY2025, aiming for a 10th consecutive year of revenue growth. The company set a new operating income target of JPY1 trillion, driven by continuous profit growth across all segments and significant investments in AI. Additionally, they aim to achieve a net income of JPY540 billion and maintain the dividend at JPY8.6 per share, with potential share buybacks and dividend increases considered after upfront investments. SoftBank remains committed to investing in AI and next-generation infrastructure, with plans for significant R&D expenditures.

In summary, SoftBank Corp.’s earnings call painted a picture of robust growth and strategic foresight, despite some challenges. The company’s achievements in revenue and operating income, coupled with its forward-looking investments in AI and technology, position it well for sustained success. However, challenges in net income realization and market conditions require careful navigation. Overall, SoftBank’s proactive approach and strategic investments are likely to drive continued growth and innovation.