SoftBank Corp. FY2023 Earnings: Exceeding Upwardly Revised Forecasts, Investing in Generative AI for Growth

On May 9, 2024, SoftBank Corp. (TOKYO: 9434) President & CEO Junichi Miyakawa presented earnings results for the fiscal year ended March 31, 2024 (FY2023). At the press conference held in Tokyo, Miyakawa said that for FY2023, revenue (6,084.0 billion JPY), operating income (876.1 billion JPY), and net income (489.1 billion JPY) increased year-on-year (YoY) by 3%, 14% and 45%, respectively*. Revenue reached a record high and operating income increased in all segments, including the Consumer segment.

• *

  When including the PayPay remeasurement gain in FY2022, operating income and net income decreased by 17% and 8%, respectively

Surpassing upwardly revised forecasts

Comparing SoftBank's FY2023 performance to the forecasts revised upward at Q3 FY2023 earnings, Miyakawa noted that all targets were exceeded, with revenue up by 0.4%, operating income up by 4% and net income up by 6% versus the revised forecasts.

Guidance for increased revenue and profits in FY2024

For FY2024, Miyakawa gave guidance for increased revenue and profits, with revenue expected to increase by 2%, operating income by 3% and net income by 2% YoY. SoftBank will also continue to adhere to its policy of high shareholder returns, with an unchanged annual dividend of 86 yen per share.

Investing in Generative AI for future growth

Miyakawa then provided an update on the Mid-term Management Plan that goes to FY2025. While the initial consolidated operating income target for FY2025 was initially 970 billion JPY, Miyakawa said that, considering the steady performance from the Consumer, Media & EC and other segments, an additional 30 billion JPY of profit could be generated to bring operating income above the 1 trillion JPY level in FY2025.

Looking ahead to the FY2026 to FY2028 three year period, the period of the next Mid-term Management Plan, Miyakawa noted that there are opportunities to achieve additional growth by investing in generative AI and other business areas. Accordingly, Miyakawa explained that the expected gains in FY2024 to FY2025 will be invested in generative AI and other areas so SoftBank can achieve its original Mid-term Management Plan targets while positioning itself for growth in the three year Mid-term Management Plan to follow.

As an example, Miyakawa noted an investment of approximately 150 billion JPY to boost SoftBank's AI computing infrastructure capability by 37 times to build a 1 trillion parameter LLM using state-of-the-art GPUs, including the NVIDIA DGX B200™. The bond-type class shares will be utilized to finance the investment, which will see SoftBank as one of the first companies in the world to introduce the DGX B200 on a large scale.

Generative AI investments will be used to meet the future demand in the burgeoning generative AI market, Miyakawa added. SoftBank will aim to be a market leader in generative AI by leasing its AI computing infrastructure, providing generative AI services, and offering consulting and solutions for utilizing generative AI. Miyakawa highlighted one generative AI solution now under development with Microsoft Japan to autonomously provide optimal responses to customers at SoftBank's call centers in Japan. SoftBank plans to utilize the solution first at its own call centers, then offer it to enterprises.

Consumer segment returns to growth

Turning toward SoftBank's business segments in detail, Miyakawa noted that the Consumer segment already hit bottom and returned to growth one year ahead of schedule. He added that the growth trend is expected to continue with continued net additions in smartphone subscribers, as well as initiatives to improve ARPU by utilizing PayPay and other group services in SoftBank's ecosystem.

To reduce capital expenditures and accelerate 5G network deployment, Miyakawa also noted that the scope of collaboration with KDDI will be expanded through their 5G Japan joint venture.

At the Enterprise segment, Miyakawa noted that revenue was up 16% YoY in FY2023 and operating income was up by 13% YoY in FY2023 - a doubling of operating income in five years. To continue to pursue double-digit growth from FY2023 to FY2025, Miyakawa noted that the data center business will be expanded and more group companies will be offering generative AI solutions to enterprises, with one example being a new wholly-owned subsidiary, Generative AX Corp.

Financial Business segment expected to turn profitable

Looking at the Financial Business segment, Miyakawa highlighted a greatly reduced operating loss in FY2023 and a forecast of 3.0 billion JPY for operating income in FY2024 to make the segment profitable. Furthermore, on a consolidated EBITDA basis, PayPay achieved full-year profitability in FY2023.

Making progress on next-generation social infrastructure

Toward the end of his presentation, Miyakawa provided updates on SoftBank's progress on building next-generation social infrastructure. In addition to progress made on a distributed AI data center structure, Miyakawa highlighted the establishment of the AI-RAN Alliance in February 2024, noting that its research themes will be used to promote the effective use of new technologies.

(Posted on May 9, 2024)
by SoftBank News Editors

Public link

Please use the above public link if you want to share this noodl on another website.