SoftBank Group swung to its first profit after four straight quarters of losses, backed by a rebound in the value of Vision Fund’s public holdings and a windfall from T-Mobile U.S. shares.
The Tokyo-based technology investor reported a net income of ?950 billion ($6.4 billion) for the December quarter, reversing a ?783 billion loss for the same period a year ago. It’s the Japanese company’s first profit since September 2022, as it navigates volatile swings in the value of its startup investments.
The Vision Fund unit reported a ?422.74 billion gain for the period, up from a loss of ?660.1 billion a year ago. DoorDash, AutoStore Holdings, and Symbotic were among the best performers contributing to the Vision Fund. The value of Didi Global’s shares also rose 22% in the over-the-counter market.
The solid quarter may herald more relief to come, according to Kirk Boodry, an analyst at Astris Advisory. “We have not been overly bullish on the current portfolio, but the listing of key VF1 assets like ByteDance or Fanatics could provide some relief in 2024,” he wrote in a note ahead of the earnings, referring to Vision Fund’s investments in China’s TikTok owner and the American online sportswear and fan gear store.
SoftBank booked an extra windfall from an arrangement to receive more than 48 million T-Mobile shares worth almost $8 billion. The deal was part of an agreement struck when T-Mobile acquired rival and former SoftBank unit Sprint in 2020, designed to give SoftBank more T-Mobile shares if the stock rose above a certain level during a given period.
A 40% rally in newly listed chip design unit Arm Holdings’ shares in the December quarter further bolstered SoftBank’s finances. As the owner of a roughly 90% stake in the U.K. firm, SoftBank will likely be able to use Arm to help finance loans for new investments, in the same way a stake in Alibaba Group Holding helped SoftBank secure financing to acquire Arm in the first place.
On Wednesday, Arm gave a bullish earnings forecast that beat estimates as a push beyond smartphones to more lucrative arenas such as servers and data centers bore fruit. Arm shares soared in after-hours trading, bringing the company’s value closer to $100 billion.
Skepticism remains, however, about the Vision Fund’s hundreds of privately held startups. The second Vision Fund, funded entirely by SoftBank, is mired in losses after a post-pandemic slump hurt tech valuations worldwide. The first Vision Fund has had its own share of losses, including from WeWork, the startup once valued as much as $47 billion that filed for bankruptcy last year.
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