SoftBank Group Corp. FY2026 FY Earnings Report

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Executive Summary

For the fiscal year ended March 2026, the company reported Revenue 77,986B (YoY +5,555B +7.7%), Operating Income 19,530B (YoY +16,482B +540.9%), Ordinary Income 10,100B (YoY +14,915B +309.7%), and Net Income Attributable to Owners of Parent 50,023B (YoY +38,490B +333.7%), delivering substantial profit growth. The primary driver was a sharp expansion in fair value gains in the investment business, notably the SoftBank Vision Fund (SVF) business recording investment gains of 66,389B, and consolidated investment gains totaling 72,865B, nearly double the prior year 37,011B. The operating margin improved to 25.0% (prior year 4.2%), a 20.8pt improvement, and the Net Income Attributable to Owners of Parent margin jumped to 64.2% (prior year 15.9%), up 48.3pt. ROE rose substantially to 34.3% (prior year 10.2%). However, the fact that comprehensive income 67,673B notably exceeded net income is driven by unrealized valuation gains, and Operating Cash Flow was -4,288B, a negative relative to net income, exposing quality issues.

Factors Driving Performance

[Revenue] Revenue 77,986B (YoY +7.7%) comprised SoftBank Business 70,340B (from 65,443B, +7.5%), maintaining stable growth, and AI Computing Business 6,403B (from 5,903B, +8.5%), which expanded. In the SoftBank Business, continued demand for mobile broadband solutions in Japan and expanded business domains including LINE, Yahoo, and PayPay contributed. The AI Computing Business was driven by Arm and Ampere in semiconductor IP and chip businesses, and the inclusion of 19 newly consolidated subsidiaries also contributed to revenue growth. On an external revenue basis, Other segments were 1,244B (from 1,121B), a slight increase, and the companywide top line progressed smoothly.

[Profitability] Operating Income improved dramatically to 19,530B (YoY +540.9%), primarily reflecting volatile investment valuation gains in the holding company investment business (investment gains 2,181B, down sharply from 34,138B prior year) and SVF business (investment gains 66,389B, up more than 17x from 3,875B prior year). The holding company investment business decreased due to the absence of large capital gains recorded in the prior period, while SVF reflected fair value increases of both private and public investments, contributing materially. Meanwhile, AI Computing Business reported operating loss of -1,373B (prior year -109B), with larger losses due to amortization/depreciation and goodwill amortization from the Ampere acquisition and integration costs of investees. Ordinary Income of 10,100B versus Operating Income 19,530B represents an inversion (EBIT > Ordinary Income) caused by substantial non-operating items: foreign exchange loss -2,710B (prior year +271B) and derivative-related gains 2,043B (improvement from prior year -20,340B). Profit Before Tax expanded to 61,349B because SVF and the investment portfolio fair value gains were already recognized at the operating income stage and derivative valuation gains contributed to non-operating income. After corporate income tax of 5,029B (effective tax rate approximately 8.2%), Net Income Attributable to Owners of Parent settled at 50,023B. The YoY increase from 16,031B (+251.3%) was purely driven by investment valuation gains, with no explicit extraordinary loss notes and with non-operating/valuation gains fully presented within ordinary items. In conclusion: revenue up and profit substantially up, but the bulk of final profit growth is due to investment valuation gains and represents a temporary expansion of profit without accompanying cash generation.

Segment Analysis

The Holding Company Investment Business reported segment loss -4,721B (prior year 7,943B), mainly due to the reversal from large investment disposal gains recognized in the prior year. Investment gains of 2,181B (prior year 34,138B) contracted significantly, and financing costs -6,456B (prior year -5,313B) and foreign exchange loss -2,820B (prior year +193B) weighed on results. Changes in investment amounts due to portfolio adjustments at asset management subsidiaries were recorded in Operating Cash Flow, causing large cash inflows/outflows. The SoftBank Vision Fund business sharply recovered to segment profit 64,446B (prior year -1,150B), led by investment gains 69,919B (prior year 4,349B). Fair values of investments held by SVF1, SVF2, and LatAm rose across private and public holdings, with valuation increases in AI-related technology investments contributing notably. Financing costs -1,649B (prior year -402B) reflected higher borrowing costs but remained small relative to the expansion in investment gains. The SoftBank Business reported segment profit 9,650B (prior year 9,063B, +6.5%), steadily increasing profit. Stable revenue base from mobile broadband services, plus ongoing cost efficiencies, absorbed an increase in depreciation -7,756B (prior year -7,399B). AI Computing Business had segment loss -1,373B (prior year -109B), with goodwill and intangible asset amortization related to Ampere integration -1,071B (prior year -973B) and investment gains +56B (prior year -204B) offsetting and leaving the segment in deficit. Other segments reported loss -3,283B (prior year 896B), with investment gains 4,083B (prior year -535B) turning strongly positive, while adjustments -3,370B (prior year 405B) mainly reflected consolidation eliminations of subsidiary investments recognized in the SVF business. Overall, SVF investment valuation gains drove consolidated profit, offsetting the holding company investment business backlash and AI Computing Business upfront investment burdens.

Key Financial Metrics

[Profitability] ROE 34.3% rose 24.1pt from 10.2% in the prior year, well above the past 3-year average (not specified, estimated in the low teens). Operating margin 25.0% (prior year 4.2%) improved 20.8pt, and Net Income Attributable to Owners of Parent margin 64.2% (prior year 15.9%) jumped 48.3pt. However, these are largely driven by non-operating investment valuation gains; a higher-repeatable core operating margin reference is the SoftBank Business operating profit relative to its revenue (approximately 9,650B ÷ 70,340B ≒ 13.7%). [Cash Quality] Operating Cash Flow / Net Income is -0.09x, with Operating Cash Flow -4,288B versus Net Income 56,320B, showing a large negative gap and highlighting that final profit is driven by valuation gains without cash. The accrual ratio (Net Income - Operating Cash Flow) ÷ Total Assets ≒ (56,320 + 4,288) ÷ 607,496 ≒ 10.0%, a somewhat high level indicating temporary accounting profit expansion. [Investment Efficiency] Total Asset Turnover is 77,987 ÷ 607,496 ≒ 0.128x, low given the holding company investment profile where fixed assets and investment securities are material. ROIC-equivalent is difficult to calculate, but approximated as EBIT margin 25.0% × turnover 0.128 ≒ capital efficiency ~3.2%; the high ROE is significantly contributed by leverage. [Financial Soundness] Equity Ratio 29.0% (prior year 25.7%) improved 3.3pt, while leverage (Total Assets ÷ Net Assets) is 2.97x (prior year 3.23x), slightly reduced. Total interest-bearing debt (short-term 7,252B + long-term 17,433B = 24,685B) increased +36.8% from 18,006B prior year. Cash and deposits 53,622B (prior year 37,130B) provide ample liquidity, and net D/E equivalent (24,685 - 53,622) ÷ 204,684 ≒ -14.2% indicates a net cash position. BPS 3,057.72 yen (prior year 1,976.35 yen, +54.7%) reflects accumulation of comprehensive income. Payout Ratio 5.6% (total dividends 635B ÷ Net Income Attributable to Owners of Parent 50,023B) is very low, implying capital allocation prioritizes growth investments.

Cash Flow Analysis

Operating Cash Flow was -4,288B (prior year +2,036B), a substantial negative divergence relative to Net Income 56,320B. The main causes were investment increases at asset management subsidiaries within the holding company investment business of -7,936B (increased investments) and increases in collateralized securities of -10,126B (increased collateral postings), and an adverse adjustment of non-cash SVF investment gains -66,386B which depressed Operating Cash Flow. Offsetting factors included non-cash add-backs of depreciation and amortization 9,188B and working capital improvement from increase in operating payables 5,509B, but the non-cash nature of valuation gains and investment-related cash outflows dominated, resulting in negative Operating Cash Flow. Investing Cash Flow was -45,072B (prior year -16,315B), driven by a sharp increase in SVF investment acquisitions -51,061B (prior year -5,789B). SVF investment sale proceeds 11,259B (prior year 4,583B) and other investment sale proceeds 38,073B (prior year 11,807B) did not fully offset. Cash paid for acquisition of subsidiaries -9,731B (prior year -1,942B) included large M&A such as Ampere, and purchases of tangible and intangible assets -17,338B (prior year -8,542B) indicate expanded capex and intangible investments. Financing Cash Flow was +63,773B (prior year -11,164B), a large positive driven mainly by gross borrowings 119,482B less repayments -54,269B, net increase approx. 65,213B. Net increase in short-term interest-bearing debt 10,431B and distributions/returns to external SVF investors -6,961B (prior year -14,858B) were other components. Free Cash Flow was -49,360B (Operating CF -4,288B + Investing CF -45,072B), a large negative, but net financing enabled cash and cash equivalents to increase from 37,130B to 53,622B (+16,492B), with foreign exchange translation effects +2,078B contributing. Cash generation capacity is weak under a valuation-gain-driven profit structure; monetization of investments and improvement in Operating Cash Flow will be key going forward.

Quality of Earnings

Of Net Income Attributable to Owners of Parent 50,023B, the operating profit base is 19,530B, while investment gains 72,865B (Holding company 2,181B + SVF 66,389B + Other 4,083B - adjustments -3,513B) are recorded in the consolidated income statement under "investment gains." These investment gains comprise fair value (FVTPL) valuation gains of private and public investments, earnings of associates accounted for under the equity method, investment disposals, and dividend/interest income. Notably, SVF investment gains surged from 3,875B prior year to 66,389B, mainly due to valuation increases in private technology investments. Derivative-related gains (excluding investment gains) were +2,043B (prior year -20,340B), reflecting hedge effects against JPY depreciation and equity price movements. Foreign exchange gains/losses were -2,710B (prior year +271B), likely reflecting valuation losses on foreign-currency denominated liabilities due to JPY depreciation. The bulk of non-operating income consists of investment valuation gains and derivative valuation gains, and the divergence between Operating Income and Ordinary Income (Ordinary 10,100B vs Operating 19,530B; difference -9,430B) indicates substantial non-operating losses. Comprehensive Income 67,673B includes Other Comprehensive Income (OCI) +11,353B (including foreign currency translation adjustments on overseas operations +11,145B, etc.), piling up unrealized valuation increases in equity. In terms of ordinary vs. one-off, investment valuation gains are FVTPL and treated as ordinary items but are highly market-sensitive and practically temporary in nature. From an accrual perspective, Operating CF / Net Income -0.09x and the gap between Net Income and OCF of 60,608B (56,320 + 4,288) equals about 10% of Total Assets, a typical example of weak cash backing for profits. Overall, earnings quality is assessed as "valuation-gain driven with high volatility and largely temporary profits that do not generate cash."

Shareholder Returns

Dividends consisted of an interim dividend of 22 yen (pre-split; equivalent to 5.5 yen × 4 after split) and a year-end dividend of 5.5 yen (post-split), yielding an annual dividend equivalent of 44 yen when considering the stock split. Total dividends were 635B (dividend payments actual 63,463 million yen), and the payout ratio relative to Net Income Attributable to Owners of Parent 50,023B is approximately 1.3% (635 ÷ 50,023), kept extremely low. The pre-split payout ratio of 5.6% is recorded in XBRL, indicating maintenance of a distribution policy consistent with the past. Share buybacks comprised treasury stock purchases -932B (prior year -2,375B) and treasury stock cancellations -3,220B, with outstanding shares totaling 57B1,185万 shares (after deducting treasury stock 1,292万 shares). The sum of dividends and buybacks as Total Return Ratio is approximately (635 + 932 + 3,220) ÷ 50,023 ≒ 9.5%, still low. With cash and deposits 53,622B and liquidity maintained via financing despite negative Operating CF, dividend sustainability is not an immediate short-term concern, but medium-to-long-term sustainability depends on improvements in Operating CF and realization of cash-in from portfolio disposals. The dividend policy appears to prioritize stability of absolute dividend amount (post-split adjusted 5.5 yen × 4 expectation) and allocate capital to growth investments and M&A.

Risk Factors

1. Investment Valuation Loss Risk: There is a risk that fair values of the investment portfolio (SVF investments 234,957B, investment securities 42,646B, equity-method investments 7,393B) could suffer significant impairments if market conditions deteriorate (declines in equity prices, rising interest rates, valuation adjustments for private holdings). Given SVF investment gains surged from 3,875B to 66,389B, a reversal could result in large valuation losses in subsequent periods. Fluctuations in investment gains directly impact net income and could materially reduce ROE and net profit margins. Quantitatively, a 10% decline in SVF investments could cause valuation losses of approximately 2.3 trillion yen, compressing Profit Before Tax.

2. FX and Interest Rate Risk: Large foreign-currency denominated investments and liabilities expose the company to FX valuation loss risk, as illustrated by foreign exchange loss -2,710B this period. Interest rate increases would raise financing costs against total interest-bearing debt 24,685B (YoY +36.8%). Current financing costs 7,718B (prior year 5,816B, +32.7%) show that continued rises in borrowing costs would compress profits at the EBIT → Ordinary Income stages. The ratio of variable-rate debt is undisclosed, but a 1% rise in interest rates could increase annual financing costs by over 2,000B.

3. Operating Cash Flow Generation Risk: The gap between Operating CF -4,288B and Net Income 56,320B demonstrates weak conversion of profit to cash. Under a valuation-gain-driven earnings structure, Operating CF depends critically on timing of dividends and sale proceeds from investments. Persistent FCF -49,360B indicates reliance on financing activities for liquidity, posing refinancing risk in adverse capital market or credit conditions. Cash and deposits 53,622B provide near-term buffer, but continued large negative Investing CF would gradually erode financial flexibility.

Industry Benchmarks (Reference – Company Estimate)

Profitability & Returns

Profitability and return metrics are overwhelmingly high within the IT & Telecom sector, reflecting the holding company investment profile and valuation-gain-driven earnings structure.

Growth & Capital Efficiency

Revenue growth slightly lags the industry median but reflects stable growth in core business (SoftBank Business) and timing effects of revenue recognition in investment activities, placing the company near the median.

※ Source: Company compilation

Points of Note in the Financial Results

1. The substantial profit increase driven by investment valuation gains is highly volatile and market-dependent, making repeatability in subsequent periods uncertain. In particular, SVF investment gains 66,389B far exceed the past 3-year average (not specified, estimated in the several-hundred-billion-to-trillion-yen range), so fair value movements of listed and private investments will determine future profit trends. Given the risk of persistent negative Operating CF, timing of portfolio disposals and dividend receipts as cash-ins will be closely watched.

2. Rapid increase in interest-bearing debt (YoY +6,679B +37.1%) and rising financing costs (YoY +1,902B +32.7%) are profit-compressing factors in a rising interest-rate environment. Although the company remains in a net cash position, continued large negative Investing CF alongside negative Operating CF would gradually reduce financial flexibility. Leverage 2.97x (prior year 3.23x) remains elevated, and there is risk of equity ratio declines if asset values fall.

3. Dividends are conservatively maintained at an annual equivalent of 44 yen after stock split adjustments (payout ratio approx. 1.3%), with capital allocation clearly prioritizing growth investment and M&A. Total Return Ratio including buybacks is about 9.5%, still modest, indicating a policy focused on pursuing capital efficiency over current shareholder distributions. Key watch items going forward are portfolio optimization (timing and balance of investment realizations versus new investments), pace of Operating CF improvement, and recovery of cash flow generation.

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This report is an earnings analysis document automatically generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any particular security. Industry benchmarks are reference information compiled by our firm based on public financial statements. Investment decisions should be made at your own responsibility, and consult a professional when necessary.

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