SoftBank back in the black with modest $70M profit in April-June quarter
The technology investor's first-quarter earnings report comes just two days after the company experienced its worst day on the Japanese stock market since its 1988 listing.
SoftBank Group Corp posted a modest profit in the first quarter with strong valuations of its preferred private tech companies helping the Japanese conglomerate report quarterly gains for the third consecutive time.
The Japanese investment conglomerate reported a net profit of ¥10.46 billion ($70 million) in the latest quarter, significantly lower than the previous quarter's ¥328.9 billion ($2.11 billion) profit (Q4 of previous fiscal year). However, it marked the third consecutive profitable quarter for the company, which had reported losses in the prior two fiscal years.
According to Bloomberg estimates, SoftBank was expected to make a profit of around $7 million for the June quarter.
SoftBank's Vision Fund investment unit, through which the Japanese conglomerate invests in companies, posted a profit of as much as ¥1.9 billion yen ($13 million). The investment unit made strong investment gains of over $220 million during the quarter.
Vision Funds (SVF1 and SVF2) sold investments totalling $0.84 billion in the quarter, which included full exits from six portfolio companies, including SenseTime and Paytm, and partial exits from several others. Notably, SoftBank exited fintech giant Paytm with a loss of $150 million, The Captable had reported.
SoftBank's first-quarter earnings report comes just two days after the company experienced its worst day on the Japanese stock market since its 1988 listing. This downturn occurred as investors sold off shares of high-growth technology companies, the sector in which SoftBank predominantly invests. Although the company's shares have rebounded over the past two days, they remain down by more than 10% compared to the previous week
Now the group has announced a buyback worth up to ¥500 billion ($3.4 billion), following a month of heavy selloffs.
SoftBank, which significantly reduced its investment activity in 2022, began increasing investments in the first two quarters of the previous fiscal year. However, as the macroeconomic slowdown persisted, the company sharply reduced its investment activity in the final two quarters, investing just $600 million compared to $3.3 billion in the first two quarters.
In India, where SoftBank has invested nearly $14 billion over the past decade, the company has not made any new investments for nearly two years. Additionally, SoftBank has not provided further funding to its existing portfolio companies in the country, despite India being its second-largest market over the past five years. Although the investment giant has been in talks to invest in the e-commerce platform Meesho, which it first supported in 2021, the deal has not yet been finalised.
SoftBank, however, has been extremely active in monetising stakes in the country. Earlier this year, The CapTable reported that SoftBank sold its entire stake in Zomato, which it got through investment in Blinkit (formerly Grofers) and Policybazaar parent PB Fintech, with nearly $600 million in profit. Over the next week, three of the Japanese investor’s portfolio companies are scheduled to go public–Ola Electric, Unicommerce and Firstcry.
The fair value ofSoftBank's investments in the Indian logistics startup Delhivery fell to nearly $0.4 billion against an investment cost of $0.2 billion, from $0.5 billion in the year-ago quarter, against an investment cost of $0.3 billion.
(The story was updated with more information.)
Edited by Swetha Kannan