SoftBank Corp. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥3.40T
• Operating Income: ¥628.89B
• Net Income: ¥475.71B
• EPS: ¥7.22

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

SoftBank Corp. (9434) delivered solid FY2026 Q2 (cumulative) results under IFRS, with revenue of 34,008.35 and operating income of 6,288.94, up 7.9% and 7.3% YoY, respectively. Gross profit reached 15,776.63, implying a robust gross margin of 46.4%, while an operating margin of 18.5% demonstrates healthy cost control against elevated SG&A of 10,320.97. Net income was 3,487.55 (+7.7% YoY), driving a net margin of 10.2% for the period and an effective tax rate of 23.0%. EBITDA grew to 9,961.62, with a 29.3% margin, indicating strong underlying cash profitability. DuPont metrics show ROE of 7.8%, decomposed into a 10.2% net margin, 0.193x asset turnover, and 3.93x financial leverage, reflecting a balance of margin strength and high leverage. Comprehensive income of 5,012.64 exceeded net income by 1,525.09, suggesting positive OCI effects (likely from financial assets or hedges), which bolstered equity in the period. Cash generation was strong: operating cash flow (OCF) of 7,089.53 covered investing outflows of 5,025.58, yielding positive free cash flow (FCF) of 2,063.95. Financing cash flow was an outflow of 5,667.82, driven by dividends (−2,035.84) and other balance sheet actions. The balance sheet shows total assets of 175,791.67 and total equity of 44,775.63, implying an equity ratio of 16.5% and debt-to-equity of 2.64x, consistent with a leveraged but manageable capital structure for a telecom incumbent. Liquidity specifics are constrained by unreported current liabilities, but cash and equivalents of 14,355.25 provide a sizable buffer. Working capital disclosure is incomplete; however, large accounts receivable (28,056.40) and accounts payable (28,286.40) indicate material carrier/handset-related financing flows. EPS (basic) was 7.22 yen with average shares of 47.628 billion, and book value per share was calculated at 93.80 yen. Reported payout and FCF coverage ratios provided in XBRL-based metrics appear misaligned with the interim earnings base; we treat them cautiously and emphasize the disclosed cash dividends paid versus period FCF for sustainability assessment. Overall, profitability trends are stable to improving, cash conversion is healthy, and leverage remains a key variable to monitor amid ongoing capex and financing needs. Data limitations (notably current liabilities, interest expense, and capex) constrain certain ratio analyses and coverage measures.

Profitability Analysis

ROE of 7.8% is explained by a 10.2% net margin, 0.193x asset turnover, and 3.93x financial leverage (DuPont). Operating margin stands at 18.5% (6,288.94 / 34,008.35), supported by a 46.4% gross margin and disciplined SG&A management. EBITDA margin of 29.3% and EBITDA of 9,961.62 underline strong operating cash profitability typical of telecoms. Asset turnover at 0.193x is modest, reflecting the capital-intensive nature of networks and sizable working capital tied in receivables. Margin quality appears sound: net income up 7.7% YoY broadly tracks operating income growth (+7.3% YoY), implying limited non-operating distortions in the period (non-operating items were unreported). Effective tax rate at 23.0% is stable and consistent with statutory expectations after typical adjustments. Comprehensive income materially exceeded net income (OCI +1,525.09), which may introduce volatility to equity but benefited the period’s capital position. Operating leverage looks balanced: revenue growth of 7.9% outpaced SG&A growth implied by the stable operating margin, indicating scale benefits without aggressive cost cuts. The negative equity-method result (−43.49) modestly weighed on below-OP profit but is not large enough to impair overall profitability. Overall profitability remains resilient, with a slight positive inflection versus the prior year’s first half.

Growth Assessment

Revenue grew 7.9% YoY to 34,008.35, indicating healthy top-line momentum across telecom service and device/solution sales. Operating income increased 7.3% YoY to 6,288.94, broadly in line with revenue, suggesting growth is not reliant on one-off gains and is supported by core operations. Net income growth of 7.7% YoY confirms pass-through from operating performance despite small equity-method losses. EBITDA of 9,961.62 and a 29.3% margin indicate scalable earnings capacity as volumes expand. The sustainability of revenue growth will depend on retention/ARPU trends and device cycle dynamics; large accounts receivable balances suggest a meaningful device/instalment component, which can be cyclical. Profit quality is supported by the OCF/NI ratio of 2.03x, implying strong cash conversion of earnings in the period. With comprehensive income higher than net income, reported equity benefited from market valuation movements, although these are not necessarily repeatable. Outlook hinges on network monetization, pricing stability, and disciplined capex; absent detailed R&D or capex disclosures, we assume continued focus on 5G densification and related digital services. Given stable margins and positive FCF, growth appears near-term sustainable, but continued monitoring of competitive intensity and handset demand is warranted.

Financial Health

Total assets are 175,791.67 with total equity at 44,775.63, yielding an equity ratio of 16.5% and financial leverage of 3.93x. Debt-to-equity is 2.64x (total liabilities/equity), consistent with a leveraged but typical telecom balance sheet; interest-bearing debt is unreported, limiting precision on net leverage. Liquidity assessment is constrained: current assets are 48,586.55, but current liabilities are unreported, preventing current and quick ratio calculation. Cash and equivalents of 14,355.25 provide meaningful liquidity. Accounts receivable of 28,056.40 and accounts payable of 28,286.40 are both large, reflecting significant working capital tied to handset and service cycles; this can buffer liquidity via supplier financing but adds collection and roll-over risk for receivables. Inventories are modest at 1,914.51, suggesting prudent device inventory management. Comprehensive income uplift (+1,525.09 vs NI) strengthened equity this period. Financing cash outflow of −5,667.82 indicates active balance sheet management (debt service/dividends), though interest expense and maturity ladders are unreported; refinancing risk cannot be fully assessed. Overall solvency appears stable with a low equity cushion typical for the sector; monitoring of leverage and liquidity buffers remains key.

Cash Flow Quality

OCF of 7,089.53 versus net income of 3,487.55 yields an OCF/NI of 2.03x, indicating strong cash conversion and low accrual dependence in the period. Investing CF was −5,025.58; with capex unreported, the provided FCF of 2,063.95 equals OCF minus total investing CF, which may overstate/understate true FCF if M&A, spectrum, or financial investments are included. Nevertheless, positive FCF alongside revenue and EBITDA growth supports earnings quality. Working capital dynamics appear significant: high receivables (28,056.40) and payables (28,286.40) point to material timing effects; collection discipline and handset receivables management are important to sustain OCF. Depreciation and amortization of 3,672.68 (≈36.9% of EBITDA) is consistent with a capital-intensive model; the D&A/Revenue ratio (10.8%) provides a baseline for maintenance capex assumptions, though actual capex is unreported. Financing CF of −5,667.82, including cash dividends of −2,035.84, indicates outflows exceeded internally generated funds, but period-end cash of 14,355.25 remains solid. Overall, cash flow quality is good, but incomplete capex disclosure limits precision of FCF sustainability analysis.

Dividend Sustainability

Cash dividends paid were −2,035.84 during the period, while reported FCF was 2,063.95, implying near 1.0x cash coverage based on disclosed figures. The provided payout ratio of 649.8% and FCF coverage of 0.09x appear to reflect a mismatch between annual dividend policy and interim earnings/FCF, and thus are not directly comparable to period net income of 3,487.55. Using period figures, dividends represent roughly 58% of net income and are approximately covered by FCF; however, true FCF coverage depends on capex specifics (unreported) and any non-capex investing flows included in investing CF. With an equity ratio of 16.5% and debt-to-equity of 2.64x, balance sheet capacity to support high payouts exists but should be balanced against capex and refinancing needs. EPS (basic) was 7.22 yen and BVPS 93.80 yen; the company historically targets a stable dividend, but policy details are not provided here. Given the strong OCF/NI (2.03x) and positive FCF, dividend sustainability for the interim period appears supported on cash flow, though leverage and potential capex requirements are key sensitivities. We caution that the unreported capex and DPS details limit a definitive sustainability assessment.

Risk Assessment

Business Risks:

• Competitive pressure in mobile services affecting ARPU and churn
• Device cycle volatility impacting handset sales volumes and margins
• Large receivables base increasing collection risk and cash conversion volatility
• Regulatory changes in pricing/spectrum that could pressure margins
• Execution risk in 5G network rollout and monetization
• Dependence on ecosystem/affiliate performance (negative equity-method income this period)

Financial Risks:

• High leverage (debt-to-equity 2.64x; equity ratio 16.5%) increasing sensitivity to cash flow shocks
• Refinancing and interest rate risk (interest expense unreported; maturity profile unknown)
• Potential OCI volatility impacting equity and capital metrics
• Dividend commitments versus capex needs with incomplete capex visibility
• Liquidity assessment constrained by unreported current liabilities

Key Concerns:

• Incomplete disclosure of capex and interest expense limits coverage and leverage analysis
• Payout metrics reported (649.8% payout; 0.09x FCF coverage) likely not comparable to interim earnings, creating uncertainty on true dividend burden
• Sizable working capital tied in receivables may mask underlying cash flow if collection timing worsens

Investment Implications

Key Takeaways:

• Top-line and operating profit growth both +7% YoY, with operating margin at 18.5%
• Strong cash conversion: OCF/NI at 2.03x and positive FCF of 2,063.95
• ROE of 7.8% driven by healthy margins and high leverage (3.93x assets/equity)
• Equity ratio at 16.5% and debt-to-equity of 2.64x underscore a leveraged capital structure
• Comprehensive income exceeded net income by 1,525.09, boosting equity
• Dividend cash outflow (2,035.84) roughly covered by period FCF, but capex detail is missing
• Large AR and AP balances highlight meaningful handset/working-capital dynamics

Metrics to Watch:

• Capex disclosure and FCF (OCF minus true capex) trajectory
• Leverage metrics (net debt/EBITDA once interest-bearing debt is disclosed)
• Interest expense and coverage once available
• ARPU/churn and service revenue mix to gauge margin durability
• Accounts receivable turnover and securitization/collection trends
• OCI drivers and volatility impacting equity
• Dividend policy updates and DPS versus interim earnings

Relative Positioning: Relative to domestic telecom peers, SoftBank shows competitive operating margins and strong cash generation but operates with higher financial leverage and a shareholder-return stance that requires sustained OCF and disciplined capex to remain comfortable.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis