SoftBank recently announced a significant gain of 724.3 billion Japanese yen ($4.6 billion) on its Vision Fund in the fiscal year that ended in March. This marks the first time since 2021 that the flagship tech investment arm has been in the black, showing a clear turnaround from the previous year’s 4.3 trillion yen loss. The Vision Fund’s profitability was a major factor in SoftBank Group’s overall profit in the fourth quarter of the fiscal year. The gain in the Vision Fund can be attributed to the increase in value of key investments such as TikTok owner ByteDance and DoorDash, among others. However, it is important to note that SoftBank also faced losses from investments like DiDi and WeWork, which filed for bankruptcy protection.
The gain in the Vision Fund can largely be attributed to the successful initial public offering of chip designer Arm, a subsidiary of SoftBank. It is worth mentioning that gains associated with Arm’s IPO are not included in SoftBank’s consolidated statement of profit or loss. This highlights the complexity of SoftBank’s investment portfolio and the diverse range of outcomes from its various investments. Despite the gains from Arm, the tech investment arm still posted a loss of 167.3 billion yen when excluding gains associated with investments in subsidiaries.
In the March quarter, SoftBank’s net sales were slightly below expectations at 1.75 trillion yen ($11.3 billion), while net profit exceeded estimates at 231.1 billion yen. This quarter’s results reflect a positive trend for SoftBank, especially considering the challenges it faced in previous quarters. Although SoftBank reported an overall loss of 227.6 billion yen for the fiscal year, it is important to note that this loss is narrower than the previous year’s staggering loss of 970.1 billion yen.
SoftBank’s Vision Fund had a challenging fiscal year prior to the recent gains, posting a record loss of around $32 billion due to market volatility and failed investments in China. However, there are early signs of a recovery, as the Vision Fund recorded its first investment gain in five consecutive quarters last year. Founder Masayoshi Son’s announcement of a shift from “defense” to “offense” mode indicates a new strategy for making investments and pursuing growth opportunities in the tech sector.
Shift towards Artificial Intelligence
SoftBank’s Chief Financial Officer, Yoshimitsu Goto, emphasized the company’s transition from an “Alibaba-centric” portfolio to one focused on artificial intelligence. This strategic shift is driven by the potential growth opportunities in AI technology and the role of companies like Arm in SoftBank’s portfolio. The company’s reduced stake in Alibaba and increased focus on AI reflect its commitment to staying at the forefront of tech innovation.
SoftBank’s recent financial performance demonstrates both challenges and opportunities for the company. The gains from the Vision Fund and successful IPOs highlight the potential for growth, while losses from certain investments underscore the risks associated with the tech sector. As SoftBank continues to navigate the evolving tech landscape, its strategic shifts towards AI and new investment strategies will play a crucial role in shaping its future success.