SoftBank Group Corp. Reports Smaller Quarterly Losses Amid Improved Investment Gains
SoftBank reports a reduced loss of 174 billion yen ($1.2B) in Q2, driven by better investment gains. Despite missing forecasts, it plans a share buyback
Japanese technology investor SoftBank Group Corp. reported a significantly smaller loss for the April-June quarter compared to the same period last year, reflecting substantial improvements in its investment operations. The Tokyo-based conglomerate announced a loss of 174 billion yen ($1.2 billion), a notable reduction from the nearly 478 billion yen loss reported in the same quarter of the previous year.
SoftBank's quarterly sales rose by 9%, driven by its diverse investments in technology companies such as the American office-space-sharing company WeWork, Chinese e-commerce giant Alibaba, and telecommunications leader T-Mobile. The company attributed a nearly 560 billion yen ($3.8 billion) gain to its improved investment operations over the past year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, successfully emerged from bankruptcy in June, contributing to the overall positive performance. Additionally, SoftBank recorded increased sales in Arm, an artificial intelligence and processor company, and noted investment gains from its holdings in Alibaba and T-Mobile.
The SoftBank Vision Funds also reported an investment gain of 32 billion yen ($218 million) as the value of its share holdings appreciated. This improvement supports SoftBank's strategic decision to repurchase up to 6.8% of its shares over the next 12 months, a move designed to mitigate the impact of the unexpected net loss for the quarter.
Despite the new buyback plan, some analysts and investors had anticipated a more extensive program. In 2020, SoftBank announced its largest-ever buyback of 2.5 trillion yen ($17 billion), prompted by pressure from the activist U.S. fund Elliott, founded by investor Paul Singer. Elliott, which had lobbied for the 2020 buyback, has since rebuilt a position in SoftBank worth over $2 billion and has pushed for a $15 billion buyback program.
SoftBank's Chief Financial Officer Yoshimitsu Goto emphasized the board's commitment to shareholder returns, indicating that future buyback programs remain a possibility. "It's certainly possible that we may decide on another share buyback program at some point in the future. Shareholder return is always a main theme of discussion among the board of directors," Goto stated.
Although SoftBank narrowed its quarterly loss compared to the same period last year, it still missed analyst expectations according to LSEG data. The weak yen, beneficial for Japanese exporters like Toyota, negatively impacted SoftBank, adding 443.9 billion yen ($3 billion) in losses for the quarter as the U.S. dollar traded at 150-yen levels during this period.
In summary, SoftBank's latest financial report highlights a positive trend with reduced losses and improved investment gains, though challenges remain due to currency fluctuations and market expectations. The company's strategic buyback plan underscores its ongoing focus on enhancing shareholder value amid a cautious investment stance.
