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Masayoshi Son’s SoftBank Group swung to a ¥1.2tn ($7.8bn) profit in its latest quarter, driven by a string of successful initial public offerings in India and better tech valuations.
The company’s results easily beat analysts’ forecasts for a profit of just ¥286.8bn and comes after a ¥931bn loss in the September quarter last year and a ¥174.3bn loss in its previous quarter.
The rebound was helped by a strong fiscal second quarter for its risk-taking and tech-heavy Vision Funds, which reported a gain on investments of ¥608bn.
Chief financial officer Yoshimitsu Goto said on Tuesday that the cumulative investment gains for the Vision Funds had now “turned positive for the first time in nine quarters. I believe that is a big message for us.”
Kirk Boodry, a SoftBank analyst at Astris Advisory in Tokyo, said it was the Vision Funds’ public portfolio’s best quarter since the end of 2020, with IPOs in India lifting valuations by $1.7bn.
SoftBank saw a string of its investment companies — including e-scooter maker Ola Electric and baby products retailer FirstCry — go public in an “August Harvest season in India”, said Devi Subhakesan, an independent analyst from Investory who publishes on Smartkarma.
Subhakesan said SoftBank could eventually see its $450mn investment in Indian food delivery group Swiggy jump in value through its IPO this week, although investors have been giving the company a lukewarm reception as it tries to grow in a fiercely competitive sector.
SoftBank benefited from valuation gains at South Korean ecommerce group Coupang and Chinese ride-hailing company DiDi, which it said was helped by interest rate cuts and Chinese stimulus measures. There was also a positive impact on net income from the weak yen.
The results will drive speculation about Son’s wider plan to invest billions of dollars to produce chips for artificial intelligence and put his group at the heart of what he considers humanity’s next step.
“I feel the clock is really starting to tick now. Masa said recently that advanced AI is two to three years away so he has to be in a hurry to get his plan under way. He must be feeling pressure,” said Boodry.
SoftBank’s cash position has fallen since the past quarter but still sits at ¥3.8tn, which Goto said “enabled further AI investments”.
Its share price is up 55 per cent so far this year, despite a steep fall in August during a record rout of the Tokyo stock market, with SoftBank helping to arrest its fall by announcing plans to buy back up to ¥500bn of its stock.
Son’s ambitious plan — which runs through from chip production and software to providing power for data centres — could put its crown jewel, the UK chip designer Arm, into direct competition with Nvidia, a key customer.
Son is due to appear in a fireside chat with Nvidia’s chief executive Jensen Huang on Wednesday morning in Tokyo. The SoftBank founder stepped back from presenting earnings results more than a year ago.
SoftBank’s second Vision Fund, which is now mostly home to Son’s own money, has also agreed to invest $500mn into OpenAI as the group increasingly targets its investments on AI.
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