SoftBank's net loss for the 23rd fiscal year decreased by 76.5% year-on-year, achieving profitability for two consecutive quarters!

The surging wave of artificial intelligence is pulling SoftBank out of the quagmire of tech stock investments - achieving profits for two consecutive quarters, significantly narrowing losses for the full year last year.

SoftBank announced its financial report on Monday, showing that for the fiscal year 2023 (ending March 31, 2024), the full-year net sales increased by 2.8% year-on-year to 6.76 trillion yen (approximately $433.8 billion), but fell short of the market's estimated 6.81 trillion yen; the full-year net loss attributable to the parent company's shareholders was 2,276.5 billion yen, a 76.5% decrease year-on-year, and better than the market's estimated loss of 2,830.9 billion yen. Diluted loss per share was 174.2 yen, compared to 662.41 yen loss per share last year. The full-year dividend was 44 yen per share, in line with market expectations.

As of March 31, 2024, SoftBank's net assets reached 5,331.1 billion yen, setting a new record high. According to SoftBank CFO Yoshimitsu Goto, this was mainly due to the listing of Arm in the middle of last year.

The SoftBank Vision Fund division reported an investment profit of 724.34 billion yen for the full year (including the investment in Arm), compared to a loss of 5.28 trillion yen last year; the division's full-year profit was 128.18 billion yen, compared to a loss of 4.3 trillion yen last year, but fell short of the market's estimated 362 billion yen.

Looking at individual quarters, SoftBank's fourth-quarter sales were 1,754.6 billion yen, a 3.5% year-on-year increase, with a net profit attributable to the parent company's shareholders of 2,310.8 billion yen, marking the second consecutive quarter of profit, compared to a loss of 576.3 billion yen in the same period in 2022.

In the fourth quarter, the SoftBank Vision Fund division recorded an investment loss of 575.3 billion yen, a 76% decrease year-on-year, having previously achieved profits for three consecutive quarters; the Vision Fund's loss in the fourth quarter was 967.4 billion yen, falling short of the market's expected profit of 1,851.4 billion yen, compared to a loss of 2,975.4 billion yen in the same period in 2022.

Arm, SoftBank's Hope

For years, SoftBank founder Masayoshi Son has been talking about the potential of AI and robotics technology, but SoftBank missed out on investments in generative AI and did not become a founder of leading AI startups like OpenAI. However, the positive outlook for generative AI has driven the market value of SoftBank's design company Arm to soar to $110 billion Arm was listed on the Nasdaq Global Select Market in the United States on September 4, 2023. In this IPO, Arm sold 103 million American Depositary Shares (ADS), equivalent to 10% of the issued ordinary shares, and raised $5.12 billion in proceeds, which were not included in the group's comprehensive income statement.

The financial report also shows that in the 2023 fiscal year, SoftBank raised $4.39 billion by using forward contracts on Alibaba's stock.

SoftBank's realized and unrealized valuation losses on its investment in Alibaba stock amounted to ¥959.9 billion, offset by derivative gains of ¥1,517.4 billion, which came from the use of forward contracts on Alibaba's stock and are separately recorded as "derivative gains (excluding investment gains)."

SoftBank's net profit in the fourth quarter improved slightly, mainly due to the funds raised through Alibaba easing some of the impact of the Vision Fund's value write-downs