SoftBank Corp. Q4 FY2026 earnings call

Previous Medium-Term Management Plan (2023-2025) Review

• Exceeded initial operating income and net income forecasts for 3 consecutive fiscal years, and hit all segment business and nonfinancial targets ahead of schedule
• Achieved the renewable energy effective ratio target one year early
• 3-year average annual CapEx remained below 330 billion yen, and annual primary free cash flow consistently exceeded 600 billion yen
• Maintained a 8.6 yen per share dividend throughout the plan period
• Overcame major external challenges including price reductions, geopolitical conflict, a weaker yen, and inflation to deliver a V-shaped recovery and record profits, building management confidence for future proactive growth

New Medium-Term Management Plan (2026-2030) Strategy

• The plan is Phase 3 of SoftBank's 10-year long-term vision, centered on the new growth strategy Activate AI for Society, which focuses on monetizing upfront AI investments and scaling AI implementation across society, entering the AI inference-focused era expected to define the next 5 years
• Revised business structure: Telecommunications remains the core foundation, with added AI infrastructure and AI services layers, plus existing Financial and Media & EC layers on top; all businesses will be integrated with AI, and new growth will be pursued in AX (AI transformation) and GX (green transformation) areas
• Capital allocation framework for FY2026-FY2028: cumulative operating cash flow is expected to total 3.4 trillion yen; 500 billion yen annual CapEx is planned, 1 trillion yen total will be allocated to strategic AI and growth investments (300 billion yen already committed to the Sakai and Tomakomai AI data centers and battery production lines, with 700 billion yen remaining for disciplined, return-focused investment); leverage will be maintained in the mid-2x range, with a target ROE of approximately 20%

Key Operational Initiatives

• Enterprise Segment: Restructured to add previously investment-phase AI software, AI computing infrastructure, and AI data center businesses to the segment; will disclose a new cloud and AI subsegment containing high-growth areas including AI data centers, sovereign cloud, and Cristal intelligence. Aims to double current cloud and AI revenue and double FY25 operating income by 2030, with a targeted 15% compound annual operating income growth. Over 10,000 already-invested GPUs will enter monetization in FY2026; the 50MW Tomakomai AI data center launches in FY2026 (target expansion to 300MW), and the 140MW Sakai AI data center launches in FY2027. Will deliver tailored AI services leveraging the in-house LLM Sarashina to 3,000 existing enterprise customers across 15 critical infrastructure sectors, following a multi-AI, multi-cloud approach.
• Consumer Segment: Aims for continued revenue and operating income growth, supported by expansion of new pricing plans, group ecosystem leverage, and increased user engagement. Will evolve from a smartphone-centric model to an AI-powered daily life platform with AI lifelong memory, and build end-to-end autonomously optimized next-generation network infrastructure capable of transporting AI tokens by 2030.
• Financial Segment: Aims for continued growth in payments and financial services; will pursue global expansion following its NASDAQ listing, strengthen online and credit-based payments, grow SME lending income, and leverage a new strategic partnership with Visa for domestic and global growth.
• Media & EC Segment: The one-time ASCO ransomware impact will not repeat in FY2026, so 10% profit growth is expected; future growth will be driven by AI agents leveraging the segment's 100 million+ domestic user base.
• GX (Battery) Initiative: Will commercialize the world's first commercially viable zinc-halogen battery, which is nonflammable, more energy efficient than 2027-projected lithium batteries, and can be sourced entirely with domestic Japanese materials. Will begin mega factory construction in FY2026, start 100MWh production in FY2027, scale to 2GWh production by FY2029, and target long-term global revenue of several hundred billion yen.
• ESG Commitment: Maintains the target of achieving full carbon neutrality by FY2030, even with the expansion of energy-intensive AI data centers, and will offset emissions growth through next-generation batteries and in-house AI-powered energy management systems.

Consolidated revenue for FY25 was 7,038.7 billion yen, an 8% year-on-year increase to a record high, with all segments reporting revenue growth. The Enterprise and Distribution segments each exceeded 1 trillion yen in revenue for the first time, giving SoftBank four 1-trillion-yen scale business segments. Consolidated operating income increased 5% year-on-year to 1,042.6 billion yen, net income increased 5% year-on-year to a record 550.8 billion yen, and primary free cash flow reached a record 633.6 billion yen.

• Consumer Segment: No full-year absolute revenue/operating income figure was provided; management targets continued growth in both telecommunication service revenue and operating income going forward.
• Enterprise Segment: Revenue exceeded 1 trillion yen for the first time in FY25, achieved double-digit operating income growth year-on-year. Current cloud and AI domain revenue stands at approximately 245.5 billion yen.
• Financial Segment: Operating income more than doubled year-on-year in FY25; the business was listed on NASDAQ in March 2026.
• Media & EC Segment: Operating income declined 7% year-on-year due to a 32.6 billion yen negative impact from the ASCO ransomware attack. Excluding this one-time impact, profit increased 6% year-on-year.
• Distribution Segment: Revenue exceeded 1 trillion yen for the first time in FY25, achieved double-digit operating income growth year-on-year.

• FY2030 Medium-Term Targets: Consolidated operating income target of 1.7 trillion yen (10% compound annual growth rate), net income target of 700 billion yen; both targets are conservative with the goal of achieving consecutive record profits
• Dividend Guidance: Starting in FY2026, the annual dividend will increase to 8.8 yen per share, with planned consecutive annual dividend increases over the next 5 years. Guidance sets 9 yen per share when net income reaches 600 billion yen, and 10 yen per share when net income hits 700 billion yen; additional shareholder returns will be considered if profits exceed expectations
• FY2026 Full-Year Guidance: Expects full-year revenue and operating income growth overall. The Enterprise and Financial segments are each projected to grow operating income by approximately 20% to drive overall performance; a 100 billion yen buffer is allocated for growth investments in the 'other' segment. A first half year-on-year profit decline is expected due to nonrecurring prior-year gains and noncash deferred acquisition cost impacts, with steady profit growth resuming in the second half as these headwinds subside
• All financial targets are maintained with discipline, with management committing to only disclose targets it is confident in achieving

• The Consumer segment faces structural headwinds including declining Japanese population and customer churn (hopping users), making 5-year forward top-line forecasting uncertain
• AI data center expansion is constrained by limited power supply capacity in Japan, which creates bottlenecks for capacity growth
• Large-scale full on-balance sheet investment in GPUs and memory for AI data centers would require 6 trillion to 7 trillion yen in capital expenditure for 1 gigawatt of capacity, which creates significant financial risk if pursued entirely on-balance sheet
• Domestic Japanese battery manufacturing is a new, unproven market for SoftBank, with uncertain commercial and technical feasibility; global lithium battery supply chains are currently dominated by foreign suppliers, creating competitive and supply chain risk for the new domestic zinc-halogen battery business
• The ASCO ransomware attack created a 32.6 billion yen one-time negative profit impact in the Media & EC segment in FY25
• Inflation has created cost pressure that forced price increases for core consumer mobile plans, creating potential customer retention risk
• The Sakai industrial complex project is in early stages, with most of the large 450,000 square meter site currently undeveloped, creating execution risk for the planned AX and GX factory initiative

Q: Why is there no public top-line growth target for the Consumer segment in the new medium-term plan, and how will SoftBank maintain financial discipline while pursuing aggressive AI investment?

A: Management notes the Consumer segment faces structural headwinds from declining population and customer churn, making accurate 5-year top-line forecasting challenging, but the team remains committed to delivering annual revenue and profit growth. For AI investment, most GPU capacity for the new data centers is already pre-sold to offtakers; SoftBank will pursue a mixed on/off-balance sheet approach: it owns the land and data center infrastructure, while customers typically procure their own GPUs and memory to avoid carrying the full 6-7 trillion yen capital requirement for full on-balance sheet development. Management will only scale investment in line with confirmed demand to maintain discipline.

Q: How is the 1 trillion yen strategic AI investment budget allocated, and why did SoftBank decide to enter domestic battery cell manufacturing instead of procuring from third parties?

A: 300 billion yen is already committed to the initial phases of the Tomakomai and Sakai data centers and the new battery production line. Up to an additional 100 billion yen will go toward expanding the Sakai data center, 200-300 billion yen toward required power infrastructure upgrades, with the remaining buffer allocated for potential M&A. For batteries, SoftBank aims to domesticate the entire supply chain to reduce reliance on imported lithium and Chinese-sourced materials, support Japanese energy security, and create a new exportable domestic industry. Battery manufacturing also complements SoftBank's existing AI-driven power supply/demand forecasting and management software, supporting its goal of stabilizing domestic energy infrastructure for AI data centers.

Q: What is SoftBank's collaboration strategy with global hyperscalers like Microsoft and Oracle, and what is its unique competitive advantage against other Japanese telecoms building AI data centers?

A: Growing demand from Japanese enterprises for data sovereignty created the opportunity for partnerships with hyperscalers to deliver domestic sovereign cloud services. While competition will increase as more firms build AI data centers in Japan, current total capacity is still less than half of U.S. levels, so expanded industry investment will grow the overall market and is a positive development. SoftBank's unique advantage is its proprietary cloud operating system Infrinia, which enables the high-margin neoCloud model (similar to CoreWeave) that is rare globally, unlike low-margin models that only provide bare data center space.

Q: What is the current outlook and pricing plan for the LINEMO consumer mobile brand, 5 years after launch?

A: No fixed long-term strategy for LINEMO has been finalized, and there are no immediate plans to increase LINEMO's prices. The recent core SoftBank brand price increase was a last resort driven by persistent inflation, and management will avoid increasing LINEMO pricing for as long as possible. The team is still evaluating the optimal positioning for the brand alongside SoftBank's larger core consumer brands as it adapts to the AI era.