SoftBank's Vision Fund, the brainchild of company founder Masayoshi Son, has faced a number of headwinds including a decline in technology stocks as a result of rising interest rates, China's difficult market and geopolitical conditions.
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Softbank It posted gains of 724.3 billion yen ($4.6 billion) in its Vision Fund in the fiscal year ended March, the first time the leading technology investment arm has been in the black since 2021.
For the full fiscal year, SoftBank's Vision Fund segment generated a profit of 128.2 billion yen, swinging to a profit after a loss of 4.3 trillion yen the previous year.
The Vision Fund's recovery helped SoftBank Group achieve profit in the fourth fiscal quarter ending in March.
The Vision Fund was helped by the increase in the value of some of SoftBank's most famous investments, including TikTok owner ByteDance and the US food delivery company. DoorDash. However, SoftBank took a hit on some of its other investments such as Chinese ride-hailing company Didi as well as office sharing company. WeWorkwhich filed for Chapter 11 bankruptcy protection last year.
The gains in the Vision Fund were due in large part to chip designer Arm's initial public offering last year.
Gains related to the initial public offering of Arm, a subsidiary of Softbank, were not included in the “consolidated statement of profit or loss,” the Japanese company said. Excluding gains related to the Vision Fund's investments in its subsidiaries, the technology investment arm posted a loss of 167.3 billion yen.
However, there are signs that a recovery is underway for SoftBank, which has been hurt by bad bets on some technology companies as well as volatile markets.
Here's how SoftBank performed in the March quarter versus LSEG estimates:
Net sales: 1.75 trillion yen ($11.3 billion) versus 1.84 trillion yen expected. Net profit: 231.1 billion yen versus an expected loss of 71.64 billion yen.
Over the full year, SoftBank posted a total loss of 227.6 billion yen, but that's less than the 970.1 billion yen loss from the previous fiscal year.
The “core” arm for AI transformation
The Vision Fund, SoftBank's flagship technology investment arm, had a tough time in the fiscal year ending March 2023, posting a record loss of about $32 billion amid plunging technology stock prices and the souring of some of the company's bets in China.
However, in the June quarter last year, the Vision Fund posted its first investment gains in five consecutive quarters, signaling the early stages of recovery.
SoftBank founder Masayoshi Son indicated in 2023 that the company would shift to “offense” mode, from defense mode, and abandon its cautious approach to start making more investments.
SoftBank has shifted from an “Alibaba portfolio to an AI-centric portfolio,” SoftBank CFO Yoshimitsu Goto said in the previous quarter.
The technology group grew into one of Japan's largest companies thanks to Son's early bet on Chinese e-commerce giant Alibaba in 2000, which flourished over the coming years.
The company has reduced its stake in Alibaba, and top executives, including Son and Goto, have expressed enthusiasm about AI technology and SoftBank's potential to invest in companies in the sector.
Arm has become a core part of SoftBank's portfolio. At the end of March, Arm represented 47% of the assets held by SoftBank, compared to just 10% in March 2020. Alibaba represented 0% of the assets held compared to 48% in the same period, Goto said on Monday.
“The arm is at the core of our AI transformation,” Goto said.
Correction: An earlier version of this article misstated full-year gains for SoftBank Vision Fund.
