SoftBank Group Corp. Earnings - Q4 2025 Analysis & Highlights
SoftBank Group Corp.'s Q3 2025 earnings call highlighted significant investments in AI, particularly OpenAI, strong financial performance with increased net income and stable net asset value, and strategic growth in areas like robotics and digital infrastructure, while maintaining a disciplined financial policy.
Key Financial Results
Net income for the first quarter to third quarter was ¥3.17 trillion, an increase of ¥2.54 trillion year-over-year.
Net sales, gain on investment, and income before income tax all increased.
The company posted a gain on investment in the third quarter of approximately ¥300 billion.
OpenAI's fair value significantly contributed to the gain or loss on investment in both the third and second quarters.
Net asset value (NAV) was approximately ¥31 billion at the end of December, and recently increased to ¥33 billion.
Loan-to-value (LTV) was 20% at December-end, and recently decreased to around 19%.
Cash position was ¥3.8 trillion at December-end, and recently increased slightly above that amount.
Business Segment Results
Vision Fund 1 had negative numbers this quarter, primarily due to Coupang ($3,800 million), which experienced a share price decline due to a data leakage.
Vision Fund 2, LatAm, and other investments showed a large positive number, with a big contribution from OpenAI.
Vision Fund 2 valuation has been growing quarter-by-quarter.
Arm showed steady growth, with revenue reaching a historic high, up 26% year-on-year.
Both license and other revenue and royalty revenue for Arm grew steadily.
Arm's non-GAAP operating income increased compared to the same quarter last year and the year before.
PayPay has exceeded 72 million users and is used by more than one in two people in Japan.
PayPay's GMV for the nine-month period was ¥14 trillion, with an annualized expectation close to 20%.
PayPay's EBITDA increased by 83% year-on-year.
Capital Allocation
The company maintains a loan-to-value (LTV) ratio below 25%.
It maintains at least two years' worth of bond redemption in cash.
Investments in the last nine months totaled over $40 billion (around ¥6 trillion).
The company utilizes assets held to raise capital, including margin loans and collar transactions.
Listed shares (51% of total holdings) and unlisted shares are used as sources of capital.
Debt markets are utilized through domestic and foreign bonds and loans from Japanese and overseas banks.
Hybrid bonds and loans are also used, with 50% maintained as equity capital.
T-Mobile, Deutsche Telekom, and NVIDIA shares were sold for a total of $21.3 billion to fund new investments.
Asset-backed finance of $15.9 billion was conducted using Arm shares and SoftBank shares.
SoftBank Vision Fund value was leveraged to raise $1.9 billion.
Senior bonds amounting to approximately ¥1.7 trillion were issued, with ¥800 billion redeemed in one year.
Hybrid bonds totaling ¥0.6 trillion were issued.
Industry Trends and Dynamics
The company is transitioning towards becoming an AI and ASI platform provider.
The Internet era made platform providers more important, and now the company is moving into the AI era.
Arm's technology is penetrating various areas, including Edge AI, Physical AI, and Cloud AI.
Armv9 chips are being adopted in mobile (Samsung Exynos 2600), autonomous driving (Rivian), and cloud AI (AWS Graviton5).
The royalty unit price for Armv9 is twice that of Armv8, and CSS-based chips have even higher royalties.
The data center business is not considered an AI bubble due to the real shortage of supply needed for growing AI computing power.
Competitive Landscape
OpenAI's weekly active users exceed 800 million and are growing.
OpenAI's annual recurring revenue exceeded $20 billion in December 2025, a 10-fold increase in two years.
OpenAI's app downloads globally and cumulatively since launch are about 1.52 billion, significantly more than competitors.
The total number of ChatGPT for work accounts has exceeded 7 million.
OpenAI is expanding its enterprise business and releasing new products like ChatGPT for Healthcare, Prism, and Codex.
OpenAI is also developing Frontier, an enterprise AI platform, and collaborating with SoftBank on Crystal intelligence for deployment in Japan.
OpenAI is testing an advertising model within ChatGPT, offering relevant advertisements based on user queries.
Macroeconomic Environment
The speaker believes the Japanese and US equity markets do not have any immediate concerns that would ruin current situations.
A recession in the United States could lead to revisiting the market outlook, but no such negative events are expected soon.
Growth Opportunities and Strategies
The company's mission is to be the number one ASI platform provider.
Investments have been made in OpenAI ($22.5 billion follow-on investment in December, totaling $34.6 billion for 11% ownership).
Strategic partnerships have been formed to advance Stargate.
Acquisitions include ABB (robotics) for $5.4 billion, a chip company for $6.5 billion, and DigitalBridge (digital infrastructure) for $3.1 billion.
Over 60% of assets in the portfolio are now ASI-oriented investments.
The company is focusing on exciting late-stage portfolio companies for future investment gains.
Lenskart and Meesho are two newly listed Indian companies with good performance and investment returns.
PayPay is expected to have good valuations when it goes public.
Arm is expected to further increase its royalty revenue as Armv9 chips penetrate deeper into different sectors.
OpenAI, SoftBank Group, and SB Energy signed a strategic partnership to advance Stargate, including a 1.2 gigawatt data center in Milam County, Texas.
DigitalBridge, with $108 billion AUM and 45 portfolio companies, will be integrated into the group.
The company aims to use leverage to fill the gap between recouping previous investments and making new ones, ensuring investment timing is not missed.
Financial Guidance and Outlook
Arm announced a guidance of solid growth, with revenue projected at $1.4 billion (18% year-on-year increase) for the fourth quarter.
Arm's non-GAAP operating expense is projected at $745 million.
Arm's non-GAAP fully diluted earnings per share is projected at $0.58.
The acquisition of DigitalBridge is expected to close in the second half of 2026.
The Stargate project involves equity investment from SoftBank Group and project finance, limiting the size of SoftBank's direct investment.
