SoftBank Group Corp. FY2026 Q2 Earnings Report

Financial Highlights

• Net Sales: ¥3.74T
• Net Income: ¥3.32T
• EPS: ¥2,041.50

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 Group (9984) reported FY2026 Q2 consolidated results under IFRS characterized by strong bottom-line recovery driven primarily by investment-related gains, while core cash generation lagged. Revenue rose 7.7% YoY to 37,368.43, with a robust gross profit of 18,511.44 and a gross margin of 49.5%, suggesting healthy contribution from consolidated subsidiaries. SG&A expenses were 14,330.70, representing 38.3% of revenue and 77.4% of gross profit, leaving a slim operating buffer before unreported R&D and other operating items. Operating income was unreported; however, the difference between gross profit and SG&A is 4,180.74, indicating limited core operating leverage absent investment gains. Profit before tax surged to 36,863.82 and net income reached 29,240.66 (+190.9% YoY), implying substantial non-operating or fair value-driven contributions. The effective tax rate was low at 6.1%, consistent with recognition of gains with limited taxable impact or utilization of tax attributes. DuPont components show a net margin of 78.2%, asset turnover of 0.076, and leverage of 2.92x, yielding a reported ROE of 17.3%; these are atypically high margins for an operating business and consistent with SoftBank’s investment-holding profile. Cash flow conversion was weak: operating cash flow was 1,794.91 (OCF/Net income of 0.06x) and free cash flow was negative at -3,220.39, highlighting a divergence between accounting profits and cash realization. Investing cash outflows were sizable at -5,015.30, reflecting ongoing portfolio activity, while financing cash outflows of -13,414.46 included share repurchases of -1,537.90 and dividends of -322.15, alongside likely net debt reduction or other capital actions. The balance sheet shows total assets of 491,610.34 and total liabilities of 310,607.30, with total equity at 168,600.40 and an equity ratio of 29.1%, indicating meaningful leverage for an investment holding structure. Debt-to-equity is 1.84x, while interest-bearing debt and current liabilities are unreported, limiting granular solvency and liquidity analysis. Cash and equivalents stood at 37,130.28, providing flexibility but not fully offsetting negative free cash flow and financing outflows this period. Book value per share is calculated at 11,834.78 JPY, and basic EPS is 2,041.50 JPY on an average share count of approximately 1.428 billion. Dividend payout was modest at a calculated 2.2% of net income, but free cash flow coverage was negative (-4.98x), indicating reliance on balance sheet strength and portfolio realizations rather than operating cash. Overall, earnings quality appears investment-gain driven with low cash conversion, and the reported ROE reflects valuation gains and leverage rather than recurring operating efficiency. Data gaps (notably operating income, investment securities, current liabilities, and interest expense) constrain precision, so conclusions focus on reported non-zero items and derived ratios.

Profitability Analysis

ROE_decomposition: Reported ROE is 17.3%, derived from a net profit margin of 78.2%, asset turnover of 0.076, and financial leverage of 2.92x. The elevated net margin is driven by investment-related gains embedded in profit before tax, not core operating profitability. Asset turnover is structurally low, consistent with an investment holding company with large asset bases relative to revenue-generating subsidiaries. margin_quality: Gross margin of 49.5% is strong. SG&A at 14,330.70 equals 38.3% of revenue and 77.4% of gross profit. Operating income is unreported; the gross profit minus SG&A math (4,180.74) suggests limited operating margin before other operating items and unreported R&D. Net margin of 78.2% is not reflective of underlying operating margins and is inflated by valuation and investment gains. operating_leverage: With revenue up 7.7% YoY, the implied operating buffer (gross profit less SG&A) is modest, indicating constrained operating leverage at the consolidated level. D&A of 4,182.40 is approximately equal to the gross profit less SG&A figure, which suggests that EBIT could be near breakeven before considering other operating items (caveat: operating income is unreported and R&D/other items may be material). Overall, profitability is currently driven by non-operating factors rather than expansion of operating margins.

Growth Assessment

revenue_sustainability: Revenue grew 7.7% YoY to 37,368.43, indicating stable to improving topline from consolidated businesses. Given the group’s mix, this likely reflects modest growth in telecom and other portfolio companies; however, sustainability depends on the performance of key subsidiaries and consolidation changes. profit_quality: Profit before tax of 36,863.82 and net income of 29,240.66 (+190.9% YoY) reflect large investment-related gains and/or fair value changes. The 6.1% effective tax rate supports this interpretation. OCF/NI at 0.06x and negative FCF point to low earnings quality this period. outlook: Future growth will be sensitive to market valuations of major holdings and exit activity, overshadowing underlying operating trends. If investment gains normalize, reported profitability could decline materially unless operating contributions increase. Monitoring the valuation trajectory of key assets and any monetization events will be essential.

Financial Health

liquidity: Cash and equivalents are 37,130.28, providing a liquidity buffer. Current assets total 94,329.18, but current liabilities were unreported, so current and quick ratios cannot be assessed. Working capital cannot be reliably determined from available data. solvency: Total liabilities are 310,607.30 against equity of 168,600.40, yielding an equity ratio of 29.1% and debt-to-equity of 1.84x. Interest-bearing debt and interest expense are unreported, preventing interest coverage and net leverage analysis. The capital structure remains leveraged relative to equity, typical for an investment holding group. capital_structure: Capital surplus is 33,767.24 and retained earnings are 27,017.92, with total equity of 168,600.40. Treasury shares are 45,376,839 against 1,469,995,230 shares outstanding, reflecting ongoing capital actions including buybacks (-1,537.90 this period). Financing CF of -13,414.46 suggests net outflows from shareholder and/or creditor distributions and possible debt reduction.

Cash Flow Quality

earnings_quality: OCF was 1,794.91 versus net income of 29,240.66, producing an OCF/NI ratio of 0.06x, signaling weak cash conversion and high reliance on non-cash gains. The low effective tax rate corroborates fair value or investment-driven earnings. FCF_analysis: Free cash flow was -3,220.39, reflecting OCF of 1,794.91 and investing outflows of -5,015.30. Capital expenditures were unreported; thus, FCF here aligns with the provided calculation rather than a capex-based definition. Negative FCF alongside significant financing outflows indicates dependence on cash balances and portfolio monetizations. working_capital: Accounts receivable were 30,081.44 and inventories 1,982.91, but current liabilities were unreported, precluding assessment of cash conversion cycle or structural working capital intensity. Given the group’s profile, working capital is less of a driver than investment cash flows.

Dividend Sustainability

payout_ratio_assessment: Calculated payout ratio is 2.2%, implying a cautious distribution relative to reported net income. With net income elevated by non-cash gains, a low payout is consistent with conservative policy amid volatile earnings. FCF_coverage: FCF coverage is -4.98x, indicating dividends were not covered by free cash flow this period. Dividends paid were -322.15, modest in absolute terms compared to cash and equity base, but uncovered by FCF due to weak OCF and sizable investing outflows. policy_outlook: Given volatile earnings and negative FCF, maintaining a stable but modest dividend appears plausible, with flexibility influenced by portfolio realizations and capital allocation priorities (e.g., buybacks of -1,537.90). Future distributions will likely track realized cash proceeds rather than accounting earnings.

Risk Assessment

Business Risks:

• High exposure to market valuation swings in major holdings and investment portfolios
• Concentration risk in a limited number of large assets
• Execution risk in asset monetizations and capital recycling
• Regulatory and geopolitical risks affecting portfolio companies across jurisdictions
• Technology cycle risk, especially in AI and semiconductors through key holdings
• FX volatility impacting consolidated results and asset values

Financial Risks:

• Leverage risk with an equity ratio of 29.1% and debt-to-equity of 1.84x
• Refinancing and interest rate risk given unreported interest-bearing debt details
• Earnings volatility due to fair value measurements under IFRS
• Low cash conversion (OCF/NI 0.06x) and negative FCF in the period
• Potential covenant or rating pressures if market conditions deteriorate

Key Concerns:

• Sustainability of earnings given reliance on investment gains
• Limited visibility on operating profitability due to unreported operating income and R&D
• Liquidity assessment constrained by unreported current liabilities and interest-bearing debt
• Dividend and buyback capacity dependent on asset sales and market windows

Investment Implications

Key Takeaways:

• Strong net income and 17.3% ROE driven primarily by investment-related gains, not operating expansion
• Revenue growth of 7.7% with solid gross margin (49.5%) but tight operating buffer (gross profit minus SG&A = 4,180.74)
• Very low effective tax rate (6.1%) consistent with fair value gains
• Weak cash conversion (OCF/NI 0.06x) and negative FCF (-3,220.39)
• Leverage remains meaningful (equity ratio 29.1%, D/E 1.84x)
• Capital returns ongoing but modest relative to balance sheet (dividends -322.15; buybacks -1,537.90)

Metrics to Watch:

• Fair value gains/losses and realized exits driving PBT
• Operating income disclosure and trend once reported
• OCF and FCF trajectory, including capex and investment cash flows
• Net debt and interest-bearing debt maturity profile once disclosed
• Effective tax rate normalization
• Valuation of key holdings and FX sensitivity
• Pace of buybacks versus changes in equity and liquidity buffers

Relative Positioning: Within TSE-listed diversified financials/holdings, SoftBank Group exhibits higher earnings volatility and leverage, with outsized sensitivity to market valuations and monetization timing, contrasted with more stable, cash-generative peers.

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
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