SoftBank : Summary of Earnings Results Briefing for Q1 FY2020

Summary of Earnings Results Briefing
for Q1 FY2020

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Date	Tuesday, August 4, 2020 4:00 pm - 5:30 pm
Speakers	SoftBank Corp.: Ken Miyauchi (President & CEO) Jun Shimba (Representative Director & COO) Yasuyuki Imai (Representative Director & COO) Junichi Miyakawa (Representative Director & CTO) Kazuhiko Fujihara (Board Director, Executive Vice President & CFO)

Summary

Mr. Ken Miyauchi, President & CEO of SoftBank Corp., discussed two themes at the earnings results briefing: (1) consolidated results for Q1 FY2020 and (2) road to achieve operating income of ¥1 trillion in FY2022.

1. Consolidated Results for Q1 FY2020

• We continued to record year on year growth in revenue, despite the COVID-19 crisis. The Yahoo segment and the Enterprise segment recorded revenue increases, despite a decrease in revenue of the Consumer segment due to a decline in mobile device sales, etc.
• Operating income increased by 4% year on year. Despite a decrease in segment income in the Consumer segment due to one-time factors such as accounting changes, full-year profits are expected to increase atop steady growth in numbers of smartphone subscribers and broadband subscribers.
  In the Enterprise segment, segment income increased due to growth in telework demand, while the Yahoo segment was boosted by growth in e-commerce.
• Net income was level year on year excluding the impact of one-time factors. We made good progress towards the full-year forecasts.

2. Pathway to achieving operating income of ¥1 trillion in FY2021

• Regarding the 'target of JPY 1 trillion operating income' announced in May 2019, the President presented a timeframe for achievement in FY2022 and specific strategies for achieving it.

• Setting profit targets and business targets for each business field:

  Consumer	Profit increase every year
  Smartphones 30 million (FY2023)
  Enterprise	Double-digit profit increase every year
  Double-digit growth in Business solution and others
  Yahoo	Profit increase / FY2023 Operating income ¥225.0 billion
  E-commerce transaction value: No. 1 in Japan (First half of 2020s)
  New fields	Reduce losses on equity method investments
  Peak out loss on PayPay

Strategies (1) PayPay platform strategy

• We will focus on expanding PayPay, with an eye to synergies with financial services, the mobile business, and e-commerce. In financial services, we use PayPay as a gateway to seamlessly connect services such as loans, insurance, and asset management. In the mobile business, we leverage PayPay to differentiate our mobile services from other competitors. In e-commerce, we expand transaction value through customer referrals from PayPay.

(2) Smartphone expansion and enterprise digitalization strategy

• We aim to achieve 30 million smartphone subscribers in FY2023 and will reinforce our existing strategies- the multi-brand strategy and collaboration with Yahoo and PayPay. In addition, with the full-scale deployment of 5G, we are aiming to increase the proportion of 5G smartphones to 60% of the total by FY2023.
• Leveraging the surge in demand for enterprise digitalization, we aim to achieve double-digit growth in Business solution and others revenue each year.

(3) Cost containment strategy for the era of the 'new-normal'

• We will make active investments for future growth. At the same time, we will work to increase cost efficiency and aim to keep fixed expenses (expenses in the Consumer and Enterprise segments) flat even with a growth in revenue.
• We will seek cost reduction at overall group level through promoting joint purchasing with the Z Holdings Corporation group and in-house development utilizing group resources.

(4) Finance cost control and shareholder returns

• Using adjusted free cash flow^*1 of over ¥670 billion, we will improve our financial leverage and provide high and stable shareholder returns.
• During the fiscal year ending March 31, 2021 (FY2020) to the fiscal year ending March 31, 2023 (FY2022), our basic policy is to pay stable and continuous per-share dividends, and to consider flexible share buybacks, with a guidance total shareholder return ratio to net income attributable to owners of the SoftBank Corp. of approximately 85%^*2.

[Notes]

1. *1
   Adjusted free cash flow = free cash flow ± total cash flows relating to non-recurring transactions with SoftBank Group Corp. + (proceeds from the securitization of installment sales receivables - repayments thereof), excluding Z Holdings Corporation and effect from the tender offer for shares of LINE Corporation
2. *2
   Total dividends and share buybacks for FY2020 to FY2022 / total net income attributable to owners of SoftBank Corp. for FY2020 to FY2022