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SoftBank Group Corp Earnings - Analysis & Highlights for Q3 2024
Overview
PositivesNegativesOutlook
- ACV is making a steady increase, up by 9% YoY.
- The company is expecting to penetrate the market further in compute subsystems or CSS.
- The company has increased its cash position in Q3.
- Net income, YTD is ¥636.2 billion, YoY is ¥1.1 trillion increase.
- The company lost ¥108 billion net-net.
- The company saw a loss investment and a net loss in Q3.
- The company has a little bit of a decrease in top numbers for the revenue.
- The company faced a difficult time for debt financing and had to slow down the speed of the project.
- Revenue guidance is expected to be between $3.94 billion to $4.40 billion ($4.04 billion).
- Non-GAAP operating expense is expected to be up to $2.07 billion.
- Non-GAAP fully diluted EPS is expected to be $1.56 to $1.64.
Q&A Highlights from SoftBank Group Corp Earnings Call Q3 2024
- Analyst asked about the timing and initial investment amount of the Stargate project.
- Yoshimitsu Goto stated that the project has not been fully started yet, and the first case, first project is expected to be executed within this fiscal year. The overall project will be project by project and will be incremental on top of the existing pace of investment. The company will share more information about the project, including size, schedule, and financing structure, when it is ready.
- Yoshimitsu Goto stated that the project has not been fully started yet, and the first case, first project is expected to be executed within this fiscal year. The overall project will be project by project and will be incremental on top of the existing pace of investment. The company will share more information about the project, including size, schedule, and financing structure, when it is ready.
- Analyst asked about the role of SoftBank Group in designing debt finance instruments and building data centers.
- Yoshimitsu Goto clarified that SoftBank will take a lead in terms of finance, and the company's team will play a key role in designing financial instruments. The site for the data center has not been finalized yet, and the company will communicate more information about it when it is ready.
- Yoshimitsu Goto clarified that SoftBank will take a lead in terms of finance, and the company's team will play a key role in designing financial instruments. The site for the data center has not been finalized yet, and the company will communicate more information about it when it is ready.
- Analyst asked about the company's use of $3 billion per year for AI services and how it will be recorded as an expense.
- Yoshimitsu Goto explained that the expense is for AI services and will be recorded as such. The company is still working on how to pay for the service and will use a pay-per-use basis. Miyakawa, CEO of SoftBank Corp., has mentioned that the service will be pay per use, and the company does not know how much they will use. The company will use a small portion of the $3 billion, and it will be used for development costs. The company is still discussing how much money the joint venture will receive and how much cost they will need to provide the service.
- Yoshimitsu Goto explained that the expense is for AI services and will be recorded as such. The company is still working on how to pay for the service and will use a pay-per-use basis. Miyakawa, CEO of SoftBank Corp., has mentioned that the service will be pay per use, and the company does not know how much they will use. The company will use a small portion of the $3 billion, and it will be used for development costs. The company is still discussing how much money the joint venture will receive and how much cost they will need to provide the service.
- Analyst asked about the equity portion of the Stargate project and how much the company will be bearing.
- Yoshimitsu Goto explained that the project for the Stargate will be structured by the company, and the equity portion will vary for each project. The company has a power generation company in the US called SoftBank Energy, and the equity portion for that company varies depending on the project. The company will share the minority equity among the four partners, and it won't be a huge amount of money.
- Yoshimitsu Goto explained that the project for the Stargate will be structured by the company, and the equity portion will vary for each project. The company has a power generation company in the US called SoftBank Energy, and the equity portion for that company varies depending on the project. The company will share the minority equity among the four partners, and it won't be a huge amount of money.
- Analyst asked about SoftBank Group Corp.'s plan to raise money for its project finance, specifically if it will be within the company's existing cash position or if it will be raised outside of the company.
- Yoshimitsu Goto, CFO of SoftBank Group Corp., explained that the company will raise money outside of its existing cash position through equity financing. He clarified that the company will not be leading the financing and that the project itself will lead the financing. The financing will be non-recourse, meaning that the company's existing assets will not be used as collateral. The company's portion in the financing will be limited to equity.
- Yoshimitsu Goto, CFO of SoftBank Group Corp., explained that the company will raise money outside of its existing cash position through equity financing. He clarified that the company will not be leading the financing and that the project itself will lead the financing. The financing will be non-recourse, meaning that the company's existing assets will not be used as collateral. The company's portion in the financing will be limited to equity.
- Analyst asked about the impact of Elon Musk's proposed $97 billion offer to buy OpenAI on SoftBank Group Corp.'s Stargate feasibility and other projects.
- Yoshimitsu Goto acknowledged that Elon Musk's proposal to buy OpenAI could have an impact on SoftBank Group Corp.'s Stargate feasibility and other projects, but stated that the decision ultimately lies with OpenAI. He also noted that follow-on investment in OpenAI is speculative at the moment, and the company cannot answer to speculation at this time.
- Yoshimitsu Goto acknowledged that Elon Musk's proposal to buy OpenAI could have an impact on SoftBank Group Corp.'s Stargate feasibility and other projects, but stated that the decision ultimately lies with OpenAI. He also noted that follow-on investment in OpenAI is speculative at the moment, and the company cannot answer to speculation at this time.
- Analyst asked about the potential risks involved in raising funds from other members and the company's commitment to Trump administration.
- The company has a long history of addressing project financing and has many experiments. They are waiting to see how it goes and do not believe that emotional responses make good results. The company may face difficulty in debt financing, but they can slow down the speed of the project if needed.
- The company has a long history of addressing project financing and has many experiments. They are waiting to see how it goes and do not believe that emotional responses make good results. The company may face difficulty in debt financing, but they can slow down the speed of the project if needed.
- Analyst asked about the impact of competition on the company's long-term vision.
- The company welcomes competition, but they need to see how DeepSeek is valued and evaluated before making any decisions. Sam Altman commented that having good services available in the market is good for the industry. The company's focus is on providing better services for the market.
- The company welcomes competition, but they need to see how DeepSeek is valued and evaluated before making any decisions. Sam Altman commented that having good services available in the market is good for the industry. The company's focus is on providing better services for the market.
- Analyst asked about the plan to put Cristal intelligence onto Stargate or use ChatGPT.
- The infrastructure user for Stargate will be OpenAI, who will utilize it to enhance the speed of development. The project is focused on providing computing power, and the Stargate Project will consist of three parts, including a system with a chip in a data center, a box for the data center, and power to run it.
- The infrastructure user for Stargate will be OpenAI, who will utilize it to enhance the speed of development. The project is focused on providing computing power, and the Stargate Project will consist of three parts, including a system with a chip in a data center, a box for the data center, and power to run it.
- Analyst asked about the competition in the AI industry and whether OpenAI is the closest to realizing AGI and ASI compared to other players.
- Yoshimitsu Goto believes that OpenAI is well-positioned and well-accepted in the industry, making it difficult for other competitors to catch up. He also stated that OpenAI is the natural choice for partnership.
- Yoshimitsu Goto believes that OpenAI is well-positioned and well-accepted in the industry, making it difficult for other competitors to catch up. He also stated that OpenAI is the natural choice for partnership.
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