SoftBank Corp. Q4 FY2025 earnings call

• Consolidated FY2025 Performance Outcomes

  • Exceeded all full-year financial forecasts, with revenue and profit growing to new record highs. The previous 3-year midterm management plan was completed, with targets achieved one year ahead of schedule after two upward revisions, delivering a 55% total shareholder return over the plan period.
  • Net income hit a new record high, growing 4.7% year-on-year, driven by operating income growth and reflecting favorable tax effects from PayPay's IPO. Capital expenditure hit 340 billion yen, in line with forecast, with the majority of incremental investment allocated to AI infrastructure.
  • Over the past 3 years, SoftBank has invested ~200 billion yen in AI computing infrastructure and data centers. Primary free cash flow generation remained strong, with 98.1 billion yen in free cash flow remaining after dividend payments. Net interest-bearing debt declined by 60 billion yen year-on-year, and the net leverage ratio fell to 2.2, improving financial capacity for future investment. Total assets grew to 18.5 trillion yen, with a 16% equity ratio (19% when excluding the financial business segment).
  • Operational KPIs: Smartphone mobile subscribers reached 32 million; churn rose 0.16% year-on-year to ~1.7% after a strategic shift to prioritize acquiring high-value long-term users over raw volume, leading to lower net subscriber additions. Excluding access charge adjustments, consumer ARPU grew 30 yen year-on-year. Broadband and electricity subscribers both grew; Media & EC transaction value returned to positive growth after ASKUL's recovery; PayBank deposits and loan balances grew steadily.

• New 5-Year Midterm Management Plan Strategy

  • The plan is centered on AI-driven growth, with a core goal of delivering consecutive record profits and ongoing dividend increases.
  • Capital allocation policy prioritizes generating operating cash flow that exceeds telecom-related capital expenditure, maintains a net leverage ratio target in the mid-2x range, retains ~1 trillion yen in investment capacity for strategic growth initiatives, and targets a consolidated adjusted ROE of ~20% while delivering enhanced shareholder returns.
  • The Enterprise segment will be the core growth driver, with the AI business moving from investment to monetization. The segment will be restructured to prioritize cloud and AI as the core growth pillars, with a target to double cloud and AI revenue and segment income by FY2030 compared to FY2025.

For FY2025, SoftBank hit a record consolidated revenue of 7 trillion yen, with growth across all segments.

1. Consumer Segment: Mobile revenue grew year-on-year for 2.5 years excluding one-time factors; core mobile revenue increases drove segment profit growth that met the full-year forecast. A one-time Q4 downturn reduced profit from goods sales, which hit 47.7 billion yen, but full-year gross profit targets were still achieved. The segment contributes the core mobile base to consolidated results.
2. Enterprise Segment: Both revenue and profit grew, meeting the full-year forecast. Revenue exceeded 1 trillion yen, with business solutions revenue up 13.2% year-on-year, and focused recurring revenue grew 10% year-on-year (double-digit growth).
3. Media & EC Segment: Total segment revenue increased despite the ASKUL ransomware attack. One-time factors, including a step acquisition remeasurement gain and ASKUL attack costs, impacted segment income; excluding these factors, core profit remained stable, with ASKUL's operations recovering by Q4.
4. Financial Segment: Revenue grew steadily, and segment income doubled, driven by the consolidated contribution of PayPay, which completed its NASDAQ IPO in March 2026 and remains a consolidated subsidiary. PayPay's GMV grew over 20%, standalone user growth accelerated with higher payments per user, and SB Payment Service hit its midterm target of 10 trillion yen GMV early, achieving double-digit non-telecom growth.
5. Distribution Segment: Revenue grew steadily, exceeding 1 trillion yen, driven by growth in ICT product and enterprise demand; both revenue and profit increased. The 'Others' category within this segment was negatively impacted by increased R&D investment.

• FY2026 Full-Year Guidance: Management targets record consolidated revenue and profit growth, with a planned 8.8 yen per share dividend, consistent with the policy of increasing dividends alongside profit growth. First half profit is expected to decline year-on-year due to the absence of the prior year's one-time revaluation gain and higher sales commission amortization, but second half profit is expected to grow driven by the full impact of consumer price revisions and the absence of one-time headwinds, leading to full-year revenue and profit growth.
• FY2026 Segment Guidance: Consumer segment operating income is expected to grow driven by price revisions, offsetting planned sales cost increases. The Enterprise and Financial segments will be the core drivers of overall profit growth, with AI and cloud leading Enterprise growth and payment function expansion driving Financial growth. All segments are targeted to deliver profit growth.
• Midterm 5-Year (to FY2030) Guidance: Management targets 1.7 trillion yen in operating income and 700 billion yen in net income by FY2030, both new record highs. Dividends will increase continuously in line with profit growth. Enterprise will deliver the majority of incremental profit growth with higher AI-related profit margins; Consumer will deliver stable growth driven by ARPU increases from new pricing, with the cost impact of new acquisition strategy moderating after FY2026; Media & EC will deliver stable growth; Financial is expected to deliver strong further growth. The net leverage ratio will remain in the mid-2x range to balance financial soundness and growth investment.

• The ASKUL ransomware attack created one-time negative impacts on Media & EC segment profit in FY2025, though operations recovered by Q4.
• Churn rate has increased slightly after the strategic shift to prioritize long-term user acquisition, which created short-term pressure on subscriber net additions.
• GPU prices for AI infrastructure investment are volatile, creating uncertainty around AI investment costs.
• AI monetization will only contribute meaningfully to profit starting in FY2027, leading to slower near-term profit growth than the midterm target implies.
• Higher acquisition costs, device purchase support program expenses, and inflation-driven increases in network maintenance costs created one-time downward pressure on Consumer segment profit in FY2025, and will weigh on first half FY2026 profit.
• A large share of incremental income from AI and fintech affiliates like PayPay will be attributable to third-party minority shareholders, limiting the growth of consolidated net income relative to operating income.

Q: The midterm plan targets 600 billion yen in total operating income growth, with Enterprise contributing 200 billion yen. Why is the first-year FY2026 operating income growth guidance only 6%, and is the guidance intentionally conservative? / A: Most AI-related business growth under Enterprise will only start contributing to profit in the next 2-3 years, which explains the slower first-year growth. The breakdown of midterm growth expects the Enterprise segment, with its higher AI-driven profit margins, to be the largest driver; Consumer will deliver stable but slower growth due to cost increases offsetting some ARPU gains from price hikes, while Media & EC and Financial will each deliver steady growth. No specific targets for individual listed affiliates like PayPay and LY can be shared due to disclosure rules.

Q: Why is net income growth much slower than operating income growth in the midterm plan, and why is the net income guidance conservative? / A: The gap is primarily due to structure: PayPay is publicly listed, and AI ventures like SB OAI are not 100% owned, so a large share of their incremental income goes to minority third-party shareholders. Additionally, there is expected upward pressure on interest costs, and FY2025 had a one-time favorable tax impact from PayPay's IPO that will not repeat in FY2026. Management still aims to grow net income alongside operating income and has set targets based on realistic underlying assumptions.

Q: ARPU increases from consumer pricing are expected to add ~80 billion yen in annual revenue, but only 9 billion yen in planned profit, with 70 billion yen going to higher costs. Where are these increased costs going, and when will profit growth improve? / A: Most of the incremental cost comes from device purchase support programs and acquisition cost amortization from the aggressive user acquisition strategy in FY2024 and FY2025. After FY2026, these cost impacts will stabilize and decline, and Consumer segment profit growth will become more consistent, with steady growth expected starting in FY2027.

Q: For the midterm target of doubling cloud and AI Enterprise revenue, which sub-segments will deliver revenue growth first, and what contribution do you expect from Crystal Intelligence? / A: SoftBank will leverage the already built GPU inventory, with full-scale AI monetization starting in FY2027 after an initial ramp-up in FY2026. Crystal Intelligence is included in the midterm plan with conservative assumptions, and no large contribution from the business is expected in the 5-year plan period.