SoftBank Group Corp
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SoftBank Group Corp
Earnings Call Analysis
Q2-2025 Analysis
SoftBank Group Corp
In the first half of the fiscal year ending September 30, 2024, SoftBank Group Corp demonstrated a robust financial performance with net income exceeding JPY 1 trillion. This represents an increase of JPY 2.4 trillion compared to the same period in 2023. The company attributed this success to significant investment gains, particularly from its Vision Fund, which recorded JPY 610 billion in investment gains. Furthermore, T-Mobile's stock performance contributed positively with a JPY 387 billion gain, signaling successful outcomes from prior acquisitions and strategic investments.
SoftBank's net asset value remained high at JPY 29 trillion by the end of September. The company has maintained a strong cash position of JPY 3.8 trillion, which has since grown above JPY 4 trillion due to favorable market conditions. With a low loan-to-value ratio of about 12%, SoftBank is well-positioned to leverage its financial stability to pursue future investment opportunities.
The company also highlighted the strong performance of ARM, achieving a quarterly revenue of $844 million against a guidance of $830 million, marking a 20% growth year-on-year. For fiscal year 2024, ARM expects to generate revenues between $920 million and $970 million, representing a growth of 12% to 18%. This reflects positively on SoftBank's strategic focus on high-growth technology sectors.
Looking ahead, SoftBank remains open to pursuing new investments, particularly in artificial intelligence (AI) and other transformative technologies. The management emphasized their intention to be opportunistic, carefully analyzing potential deals rather than rushing into significant investments. They showcased a recent investment of JPY 500 million in OpenAI, reiterating the importance of engaging with leading AI companies to foster future synergies.
The executives expressed optimism regarding the growth potential in the AI sector, highlighting that AI is not only a focus for investment but also a catalyst for enhancing existing business models across various industries. With strong positioning in this burgeoning field, SoftBank's investments in AI technologies are set to pay significant dividends, aligning with the broader industry trends.
Despite strong financials, the management acknowledged the potential challenges from macroeconomic conditions, particularly regarding U.S.-China relations and the upcoming presidential election's policy implications. SoftBank has adopted a cautious approach to new investments in China, indicating the company's intent to closely monitor geopolitical developments while safeguarding its portfolio companies.
The broader market response to SoftBank’s performance has been favorable. Following their latest earnings announcement, there is an optimistic sentiment around SoftBank's strategic direction and its potential to capitalize on emerging technology trends. The company plans to maintain open communication with investors and adhere to its disciplined financial policies to enhance stakeholder trust and value.
Overall, SoftBank's recent earnings call revealed a strong financial position, highlighted by impressive gains in its investments, particularly in T-Mobile and ARM. The proactive approach to investment in AI and a robust cash position further bolster their future growth potential. Investors are encouraged to watch for SoftBank's strategic moves in the technology landscape, especially as it continues to navigate external challenges and explore new opportunities in high-growth sectors.
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Thank you very much for waiting, everyone. Now we would like to start the SoftBank Group Corp. earnings results announcement for 6-month period ended September 30, 2024. First of all, I would like to introduce today's participants. From left, we have Mr. Yoshimitsu Goto, Board Director and CFO; Kazuko Kimiwada, Corporate Officer, Senior Vice President and Head of Accounting Unit; Mr. Navneet Govil, CFO, SB Investment Advisors and SB Global Advisors; and Mr. Ian Thornton, our Vice President.
Today's announcement is live broadcast over Internet.
Now I would like to invite Yoshimitsu Goto to present you the earnings results and business overview. Mr. Goto, please.
Thank you for the introduction. This is Goto speaking. Thank you very much for joining during your busy schedule. Here that we would like to announce the numbers, which actually is -- I'm quite happy with, with the good numbers, good results. The 1 thing that I couldn't achieve this term was at hogs. I could not win the Japan Championship, which is 1 big lift up. That's something that we need to do challenge again for the next year. So there is no reason for the loss. So I believe that we need to review once again and do it again. Actually, the earnings is not a lose actually win in the win, there is no -- there is a reason for win as well. So I would like to explain why this time for the good numbers.
Start with highlights. Net income was over JPY 1 trillion mainly driven by good performance of the investments, which has been challenged in the past 2 years, which is a vision fund, made a good performance this quarter. and also T-Mobile share price is doing pretty good. So as a result, that made quite a good contribution to the earnings results this time. And net asset value, which is actually our enterprise value itself of our company was -- remained high and at JPY 29 trillion at the end of September. After the market is doing much even better so that, that brings us even better results for the latest number wise. Vision Fund, recorded JPY 610 billion as an investment gain and also posting cumulative gains, which is another kind of highlights in the symbolic message to the market. And performance also continues to excel. And as a result, we are able to maintain the very robust and stable finance financials and also maintain ample cash reserves, which will enable us to further AI investments.
So I'd like to go into a little bit of more details, starting with consolidated results. As I mentioned, net income for the first half, exceeding JPY 1 trillion compared to the year ago, first half of 2023 actually is increased by JPY 2.4 trillion. And investment gains was JPY 2.6 trillion so that compared to the last year first half, JPY 3.6 trillion increase, the breakout down of these numbers will be followed by next pages. Here, the investment gain and loss and net income quarterly basis. JPY 2 trillion and over of the gain on investments. for the quarterly basis. And if you see more in details. JPY 2 trillion gain in investments, mainly due to the blue portion, JPY 567 billion from the Vision Fund. And the green bar inside of it, you see the dotted lines, which is a T-Mobile contribution by JPY 387 billion. So total Vision Fund in the T-Mobile over JPY 1 trillion of the performance contribution. Remaining, you may wonder is actually from the Alibaba share transaction, this is financially is a completed financing. In the scheme, we have used the prepaid for the contracts. As a result, we set the share price and agree the future sales and get the money in advance and because there are some share remain for before the settlement and that actually have market valuations and evaluation gain was about JPY 1 trillion or so. But that also being settled. Therefore, this is the kind of adjustments. So the sales has already been completed. And later on, even that share price increased, but still, that does no impact to the cash settlements. Therefore, accounting-wise, evaluation increase. However, that's been already done. So that's going to be adjusted through the derivative transaction. In total, it's about JPY 1 trillion. However, at the same time, we see the ForEx movements. And because of the ForEx movements, we have about the difference of JPY 400 billion. So green portion is the gain on baba shares, but below JPY 1.4 trillion with the JPY 400 billion of the ForEx impacts. And that also needs to be considered altogether. So put to JPY 2 trillion of the positive, you can exclude the Alibaba settlements. So maybe JPY 1 trillion of the visual funding at T-Mobile is a big contributor for the performance this time. But even with that, compared to the first quarter or the quarter on for the 2023 after you are making quite a steady growth, which is a very happy result for us. and key indicators 3 indicators that we see as a key indicator, net asset value, loan-to-value and also cash position. Net asset value, as you saw on the previous pages, JPY 2 trillion at the end of September. Loan-to-value, 12.5%. Cash position, JPY 3.8 trillion, not only net asset value, but the loan to value and cash position that was also contributed by the good market performance. And the latest wise loan-to-value, probably less than 12%, somewhere around 11% and cash position because of the ForEx. Actually, the -- yes, exceeding JPY 4 trillion as of latest number wise. So it is positively moving as a matter of fact. Net asset value see slight decrease mainly because SoftBank Corp, decreased slightly. Instead, we see the increase in T-Mobile and Vision Fund. And also, we have a ForEx impact. So we have some kind of a bounce back. starting from 1998. This is a history of net asset value of ours JPY 29 trillion, I believe that, that gives you the good latest view on SoftBank Group.
About the T-Mobile file that I touched upon sometimes earlier, it was when we acquired Sprint, we acquired Sprint in 2023. And since then, they were churning around the business. And in 2020, they were merged with the T-Mobile. And back then, the stock price was $82. But at the last day of last week, it went up to a historic high of $238 or 3x bigger than the 1 and we immersed we have T-Mobile and Sprint. Since the merger compared to other carriers in terms of index, like AT&T, Verizon in the U.S. and China Mobile, which was #1 in the world and NASDAQ, which is a tech-related index, if you compare with them, T-Mobile outperformed China Mobile, AT&T and Verizon, even against NASDAQ T-Mobile is way ahead. So looking at the stock price or market cap, if you take a look at on the left-hand side, when we acquired Sprint, 2012 actually. Back then, this tiny, tiny bar was T-Mobile plus Sprint, JPY 22 billion. So far behind Verizon and AT&T as of end of September, however, T-Mobile exceeded not only AT&T Verizon but also China Mobile, which 1 was #1 in the world. where this growth come from free cash flow. This pink is T-Mobile, as you can see, the free cash flow is building up steadily. On the other hand, Verizon and AT&T in the last 4, 5 years, they are on the declining trend. So it's very clear contrast between T-Mobile and their competitors in the U.S. So from our investment performance perspective, equity, we put about JPY 4.4 trillion and 2.1 trillion was leveraged and borrowing was already repaid. And equity value grew from JPY 0.4 billion to JPY 3.9 trillion, and MOIC was almost -- excuse me, 10x and equity IRR 26%. So the performance was clearly good. We reminded you on this because T-Mobile contributed a lot to our great performance for this term. And still, some people believe SoftBank failed and the Sprint transaction, but we -- probably it's our fault not being able to communicate well with the community. But again, we just wanted to show, again, our investment in Sprint turned out to be great.
Talking about investment of SoftBank, Alibaba and Sprint were the major investment we made so far. Alibaba we invested a little bit in the beginning. So MOIC is tremendous, like 1,340 x, but that's reality. ARM of JPY 3.3 billion investment, JPY 2.3 billion was equity and MOIC was 8 and IRR is almost 30%, and we can still expect upside because ARM will play a key role in AI development.
About ForEx, which has been fluctuating. In the first half of this fiscal year, it was JPY 151 per dollar as of March end. And as of end of September, JPY 142. At this level, the foreign exchange had a negative impact on NAV by JPY 1.9 trillion, and also negative impact on equity by JPY 1.3 trillion negative. But on the other hand, positive impact on net income, consolidated net income by JPY 0.3 trillion. And now that Mr. Trump was elected as the present and rate is around JPY 153 per dollar recently. So again the market condition changes as ForEx changes. So looking at -- that kind of changes will be flexible in terms of what kind of actions we should take.
About the cash position for this quarter, arm listed last year. And at that time, we purchased Vision Fund Holding. And in this term, the payment took place. So investment related, including installments for share transaction consideration was the driver of reduction of the cash position. On the other hand, we did a debt financing. So from cash flow perspective, we saw a positive number. But all in all, net cash position as of end of September was JPY 3.8 trillion. But more recently, it should exceed over JPY 4 trillion, thanks to the better market condition. And always keeping 2 years' worth of bond redemption is the commitment we make and we are actually making the comment. In fact, not only 2 years, but also 3, 4 years of bond redemption can be possible at this cash position. LTV. 1.5%, very stable and low level. Recently, even lower than 1%, so even much safer. Looking back the history of cash position, this is the trend constantly, we have capped around JPY 4 trillion.
Now shifting gear to SPF. So quarterly gain and loss on investments this quarter for billion gain in this quarter, which is a very good number. This combined vision funds numbers. In the past few years, there are big ups and big downs. But when we see the big terms, we always tried the very conservative max or valuations. And I believe based on such a history, I believe that we are able to make a good result. So we would like to maintain a very conservative view. And at the same time, share such numbers and results. First, there are Vision Fund I and II being started. And on your left-hand side, the Navy 1 is the Vision Fund 1 results. mainly public shares and also the private shares in making a good momentum. And actually, the highlights this quarter is on your right-hand side, Vision Fund II, because the investment started about 3 years ago and valuation, the valuation for the private equity was relatively high back then and also after then, market kind of sluggish. Therefore, that has been impacted to the number. Still a lot of public private securities in Vision Fund II. But this time that we see the good improvements. And also the inside of the portfolio, we've been seeing a lot of good potentials. And that we believe is making a good work to boost overall results for the Vision Fund II. And here is the -- some highlights for the Vision Fund I portfolio companies. For the public company wise coupon, fair value was JPY 8.6 billion. And along with the increase in valuation, we have a JPY 1.2 billion unrealized gain, variation gain is recorded. And ridesharing company did in China, it's like a Uber type of company. And they have this deal from the U.S. market once, but still that the transaction is ongoing and fair value is now 4.6%, and this is also making a good growth. These 2 are the kind of major highlights for the Vision Fund 1, but also including the other public portfolio companies this quarter, JPY 2.8 billion in total of the public companies. Vision Fund, -- now that we see IPOs from the portfolio companies in Vision Fund II, more and more, and this time -- this quarter, especially the good contributor was the Ola electric, Crystal pie and there are also other public companies, but it hasn't spent too much time after the IPO, so that does not making a big contribution to the results. But at the same time, we do have a good pipeline the private companies in total is a little bit of shy of JPY 1 billion, and that was another good contributor for this time result. So with the small efforts by each portfolio companies that comes down up to this number. If you go inside, you see the Revolut or Clara, they are making a good growth now. For the details, Vision Fund 1 and Vision Fund II, we will be able to share as we have Navneet in person so that he will be able to give you more color. Obviously, at the investor briefing after this announcements. And here, the gain and loss on investment cumulative here, is turned to positive for the first time in 9 quarters, I believe that is a kind of a big message for us this time because in the past 2 years or so, we've been working hard, but also we are not able to bring to the positive number. But now that we are able to come to this close. Of course, we may see volatility ahead. But now that we're seeing more and more public companies, public portfolios in Vision Fund 1 and Vision on I also start seeing more and more companies, let's say, becoming -- entering into the late-stage portfolio companies are increasing. So that's something that we are very much expecting in the future. Vision Fund 1 Cumulative investment return recap on your left-hand side is the investment cost because Vision Fund I already finished its investment period. So 89.5%, no change between June and September end. And the current Cumulative investment return on the right-hand side, those 2 bars are far right is the end of September number, $112 billion. Three months before, so like a June end, actually, you see the good growth from June end to September and green portion is the already exited in blue we've seen improvements in public companies, those are the companies that we still hold. And that grew in the very bottom, those are the private companies. Here in the private companies, we do still have a good attractive companies such as [indiscernible] fanatics. So those are also we have good expectations for the valuations. And not only that, we have some others as well. So now that we are reaching JPY 112 billion. So we believe we start seeing a good kind of the results for the return for the Vision Fund 1 now. This fund life will be 2029. And also, they have a 2-year extension option to Vision Fund 2 investment costs on your left-hand side, JPY 53.6 billion investment so far and still having a bit difficult quarters in the past for the performance, but this September, and we were able to achieve JPY 32.6 billion return compared to Vision Fund I, it still have a good proportion of the investment portfolio is still the private companies. So we would like to keep a good eye on them. And of course, in addition to that, we would like to continuously have new investment activities. So that's going to be also another important factor for Visual Fund II performance. And let me also go into a little bit more details in the Vision Fund II portfolio companies. And this is the public listings and pipelines. We have 53 listings so far since inception. And also for the second quarter, we had 2 IPOs, first plan and Ola electric. On your right-hand side, late-stage portfolio, they are in a good growth, they can start seeing for all the preparations, and we're seeing the JPY 34 billion for the large late-stage portfolio. By Dan fanatics or Ola, which is the parent company for Ola Electric that went IPO this time. And on your right-hand side, Vision Fund II and LATAM fund, PayPay in Japan is also the good expectation we have. and Siggi, which is also close to the IPO and open, we made investments from Vision Fund II this time, which I will touch on a later page. And 2 companies that went public this time for this quarter, this is from a portfolio first cry, and Ola Electric, both the IPO in Indian market. First, as you can imagine from the name of the company that the online store for newborn and baby and kids products. And on your right-hand side, Ola Electric, this is manufactures electric scooters and provides products globally. So like scooters so-called, that's the main products for this company and well received in the market. and MOP is also very stable now. In visual Fund II also making new investment activities in a very selective manner and adding 1 by 11 of which is Glen that provides best-in-class search functionality and higher user-friendly agents for enterprise. Also, a poolside which supports developers in improving work efficiency by building generates for software development and holding and op which well known by you in the market, I believe.
Talking about open AI, let me share with you some numbers that we can show you. The investment by SVF2 was JPY 500 million, was the round in September. OpenAI's total loan size was JPY 6.6 billion. For that round, post-money valuation of open AI was expected at JPY 157 billion. The tremendous evaluation as a public entity, but they have a great business model and technology. So it's not a surprise. Revenue, expecting 131% increase year-on-year to JPY 370 billion. Business overview. As you can see, weekly active users average monthly website visits CGPs subscribers active users reached JPY 250 million, average monthly upside visit, JPY 1.7 billion and CGPs subscribers, 11 million. So they are on a strong momentum toward the realization of AGI, the benefits of humanity. In fact, that's why we made a decision to invest, invest in the company. Of course, there are competitors, but if you compare with them, more clearly, it shows open AI's ability and capability monthly website visits open monthly average was JPY 1.7 billion. But as for September they hit JPY 3.7 billion. At the very bottom, there are competitors like meta Cloud and Gemini, those hyperscalers are offering Gen AI-powered services, but open AI is far ahead of them. They've got a great market share and I believe that open AI will expand the market with its technology and business model. So we will look and see how open AI goes with high expectations.
And let me share with you a slight change of the organization Rajeev Misra will step down as Co-CEO and Alex Clavell, will become sole CEO of SBIA and SPGA. Rajeev, as a member of SoftBank family, should be able to contribute to us a lot. And of course, our Rajeev is a great friend of Masa-san, and when Rajeev was an investment banker, I got to know him, and I've been working with him for over 20 years. So here as a comrade and I don't speak good English but as unknown Japanese friend, he is 1 of the great non-Japanese front of mind. And I want to learn continuously from him and appreciate his contribution so far now change the subject to ARM. They keep a great performance. Quarterly revenue is shown here, $844 million. It exceeds upper threshold of $830 million of FY '24 second quarter guidance, which was already announced. And for the first half revenue compared to the last quarter and the quarter before that, year-on-year, 20% increase was recorded for this half year. And quarterly non-GAAP operating income is shown here now, $26 million. That's above analyst consensus. On a quarterly basis it looks a little bit down from the quarter 2 last year. But half-half basis, they recorded an 18% year-on-year increase. So great performance. As usual investors, analysts, the media may have a different view on that performance. For the short term, ARM is 1 of the volatile stocks, but we are looking at arm's mid-long-term growth potential, and we hope to help them to increase their value and their corporate value at the moment, and there are operational excellency and performance, we are happy with them at the moment. In announced guidance for the revenue to $920 million to $970 million or 12% to 18% year-on-year growth. For the full year FY 2024, the announced guidance was plus 18% to plus 27%. And -- so those numbers are for your reference.
Maybe I should share with you some of the topics that I had in the first half of this fiscal year. [indiscernible], excuse me, I think this is a very significant event. Meta developed new Llama LLM, Llama 3.2 LLM was released. And they optimized this to run on ARM-based CPU. This LaMa3.2 has high scalability and delivers high performance. Again, this is optimized for ARM CPUs and in fact, it delivers up to 5x better performance, and more enhanced algorithm, AI allots not only can run on cloud, but also can run on edge device like mobile. Since our performance is great, speed is better and has a greater energy efficiency. So I think that's a great product. Looking back 1 year post IPO, obviously, they have strong financials. On the left-hand side, as you can see. First half royalty revenue was up 20% year-on-year. And license revenue significantly exceeds the forecast made at the IPO. In the middle column, it's talking about technology. They developed and deployed new technology and ARM9 contributes 25% of royalty revenue, not only mobile, but also data centers by major high for scalers are running on the and compute subsystem is applicable not only to mobile but also other diverse applications like automobile, data center and PC by utilizing CSS or compute subsystems, users should be able to reduce cost and time to market. And I believe that ARM is contributing a lot to the end users. And on the right-hand side, as you can see, ARM provides a positive evaluation from the market. Share price rise around 3x post IPO. And in the last 1 year, volatility is clear sometimes share price, 140, 50, 80, but nonetheless, share price grew 3x post IPO. So again, we are happy with that great performance and now is included in NASDAQ 100 and SOX, I'm sure that, that should help stabilizing ARMS's performance going forward.
Last part is the financial strategy. In our previous year-end that we share with you the financial strategy and basically no change so far. On your right-hand side, you see 1, 2 and 3 loan-to-value, bond redemption 2-year worth. These are the financial policy that we have. So to check our soundness of our financials. These are the kind of easy-to-understand type of the disciplines that we are keeping in our company and that is going to be remain the same. But on your left-hand side, in the past 1 year, there are many changes in the environment and market. We flexibly address those change and at the same time adhering to financial policies. And at the same time, we like to keep building trust relationship with stakeholders. And so that we'll be able to keep those financial policies. So equity market and credit market, we have a relationship with them and globally or domestically, that we have so many stakeholders for our company. And for all the stake, we would like to reap to the expectations of those respective stakeholders. And also, or be good accountabilities for the company's current and also the future. So keep those in mind that we would like to continuously communicate with the market and the stakeholders as an investment company it's also important how are we going to use our cash capital. and the capital allocation. Should we use for the new growth? What should we use it for the balance sheet? Or should we use it for the shareholders? We try to pursue the best mix of those factors is our main mission. Having said that, I believe the most important thing is the growth investments for the future net asset value expansion for the future growth of the company. Of course, we haven't made any big investments so far in the past few years. However, we always try to be prepared for the opportunities and there will be a time of full-fledged AI. And what's the agenda we should be looking for? And what are the companies and entrepreneurs that we should be investing in all the companies people. That's something that we would like to look for so that we will be able to support the good growth of the company in the future. As I mentioned, capital allocation, how are you going to use the use of proceeds, this is a kind of a simple chart that I can share for the capital allocation. And where the money comes from as an investment company, in principle, we have a return from the investments and that recycled to new investments. But the 1 note is that this timing for the investments and monetizing the asset of the best timing, NEBA matches. If you can -- if you have a rule to use monetize money, for the new investment activities, then you always have to monetize in advance. And if you are not advanced you lose opportunity. And IB Leverage Finance can bridge those 2 difference of the timing -- best timing. So by having the good leverage debt capacity, we'll be able to keep take all the opportunities we may have. So we would like to have a good health soundness of the financials for the net and at the same time, have the capability for leveraging that capacity and the return redemption will come from the monetization of the assets. So opportunities for new investment activity should not be missed and try to have a structure the best scheme for the monetization. And at the same time, we would like to increase the asset value. And once we have monetization, we will be able to think about more improvement in balance sheets or the shareholders' return. So for the shareholder return can be returned to equity investor as well as credit investor, both important for us. So for the equity investor buyback or those are the scheme we can think of. But for the credit investor. Improving our balance sheet and also having more possibilities, good room for the repayments. That's going to be important factor for the credit investor. Of course, value of the loan to value of the debt needs to be also improved, then that can be a good value for the credit investors. So -- that also means improving our credit. So that is kind of near the equals to our improvement of the balance sheet. So those 3 factors is a kind of a 1 set. And I would like to seek for the best balance of that. Under such circumstance, first 6 months, half first half of the 2024, it's about JPY 2 billion each for the investment mode, that's something within our expectation. So last year, third quarter and fourth quarter was too small probably if we look back. And we have a 3 months period, but the investment NEBA comes at the same time for the decision-making and the investment execution itself. It has a time difference, of course. So if you think about that, it may not make sense to just compare on a quarterly basis. So you may want to see in an annual basis. That may be probably better to understand how the company is moving. But just for full year references is the actual JPY 2 billion each for the investment amount so far in the first half of 2024. And also mentioned in the previous announcements that for the beginning of this term we had a big drop in share price and we had immediate response with the buyback announcements. So the maximum of the JPY 500 billion and up to October, we have made the progress of the 35%, so JPY 174 billion so far. So we have a 1-year term. So I think we have a good progress so far. So on summary, once again. As you saw earlier pages. Number-wise, I believe we were able to announce a good number for you this quarter. Asana group-wide effort, we are heading towards AI era. And what can we do? What kind of role can we play? And in AI era what kind of changes are we going to see? And what can we do for those changes? As a center, AI chip business model development is 1 and also many frontiers of generative PIs, needing data center and the electricity for the further development of the business. And I believe to promote the AI business, data center can be another agenda for us. And as you may recall, we've been working on the robotics, starting with [indiscernible], you may recall that. And with that robotics technology, now that we see the more and more use cases for the robotics. And that is something that we would like to continuously invest in through Vision Fund, that we've been already making an investment in robotics. And I think there are many potential good companies and businesses around us. our leader not yet been motivated to come back to the stage on earnings, but he comes up to the stage time to time. The latest 1 was the SoftBank Growth 2024 as a keynote speaker, and he made a comment saying that the AGI will be realized within 2, 3 years is within 10 years. So he shared his concept or his ideas regarding AGI and ASI. These time lines, of course, we have these numbers based on many assumptions and hypothesis it may change. However, still, we believe that, that time will come for sure. And that's kind of unavoidable results. And in his presentation, he mentioned that I will evolve into super wisdom. I know there are many opinions when it comes to the risk or a negative factor. But also, we believe that it will contribute to the happiness of all human beings and we need to continuously make an effort on to that. And these are the slides that he used at the SoftBank world and how are we going to kind of evolve going forward? You see the slide in Masa's photo -- on Masa's photo, there are 4 boxes. Information when comes to knowledge and that will become intellect and that will become intelligence. So that's the kind of a process that I will encourage the world to evolve. And as you see on your far ultimately on your right. will kind of expand like a big ban and Intelex to intelligence and many more evolution there will be hurdles, there will be friction. But still, that will come along with the happiness for human being. That's something that we are hoping and aiming at. And with that, we believe AI will be able to have a good harmony with human humanity not only Masa, but the group overall, group-wide, we share the same vision and concept and we do our own job, what can we do under AI era. So always keep the agenda in mind and try to improve our enterprise value.
So last slide is always like a big way ocean, and we have boats or we're working around. But now that we're seeing some summits there, but still far away. How can we come close to the summit. We don't know how we're going to climb yet, but there is not only 1 way to climb there. There may be many ways we can try and error and try to achieve. We would like to become the 1 companies out of many to achieve the top of the mountain and try to improve our enterprise body at the same time. And for that progress of this claiming of the mountain, I would like to share with you on a quarterly basis going forward.
That is all from me for my presentation. Thank you very much, and I'll be happy to take any questions after this.
[Operator Instructions] Now from the floor.
MJ from Bloomberg. I have 2 questions. First, Rajeev-san -- about the Rajiv-san. Going forward, what kind of role Rajeev-san will play in SoftBank? So in -- or Rajeev-san's role in SoftBank is over? That's the first question.
And second is about investment in open AI. Could you give us a background why you decided to invest now? And why not a group, but by Vision Fund II. And if possible, on Vision Fund's investment strategy, [indiscernible] 500 million seems like a big among the recent investments from the Vision Fund 2. So if we could get an explanation a bit more about the Vision Fund strategy, that would be great.
First question I will take. And maybe I'm going to ask Navneet to add. About Rajeev. His key role is over. As announced, he himself takes a lead in managing a fund. And I'm sure that he will focus on that management was that 1 I am Yes. I'm sure he is focusing on running his own fund. But does that mean complete goodbye to Rajeev? I don't think so. I think we're going to keep communicating with him in some way, and I'm sure he's going to visit Japan from time to time. I will keep getting in touch with him. But like, as a management team, for example, that kind of relationship and role is over.
About open AI. So they invited potential investors, and they created opportunity. And this timing, of course, we have tremendous interest in them, and we have close communication with the management, and maybe it will be great if timing was earlier, but I think still that round was great terming.
And about Vision Fund portfolio, Navneet would you like to add some color?
Sure. Thank you, MJ, for your question. In terms of our investment strategy in Vision Fund II, we are very much focused on companies that are AI leading companies, whether they're product led or leveraging AI. And our criteria is things. We look at the quality of the AI tech stack. Basically, the key is transformative companies that are driving innovation and value creation through artificial intelligence. The second is product market fit and scalability. So having a good product does not necessarily mean having product market fit product not only meet market needs, but also needs to have significant potential for growth, scale and impact. The third thing is unit economics. So it's more than just margins, but overall financial health, sustainable, scalable business model that promises long-term profitability and success. And the fourth criteria is execution excellence. So consistent, continuous execution to ensure the efficient and effective translation of vision into tangible business results.
You have another question about the Vision Fund, open AIs. Why Vision Fund and not SoftBank Group?
So again, Open AI invited potential investors, and that was the round in September and obviously, open AI has a road map and they made it clear. From our perspective, again, it was just a minority investment, and also, it's clear about their road map going forward. That's why I think it was good to have a fund to invest in that group.
Any other questions? Person in the very front row, please.
My name [indiscernible] form Nikkei take newspaper. I also like to ask about Open AI. Even from the fund, but I think there is a meaning to have even if a minority, especially when it comes to AI strategy, it may be easier for you to create a synergy because you'll be able to catch the good trend of the latest AI information. So with that, can you talk about the AI investments?
So of course, this is a company leading the world with the generative BI. So this investment is going to be making it even more robust in terms of relationship with them. And even after the investments or before investments, we are continuously keeping the good communication with them. so that we can discuss the potential for the future business that it will be also important for us and there are many to learn from them in terms of the AI trend in the world. That can be a good learning for us, their technology, their future visions can be also the good for learning for us for our development of the business. At the same time, the top of the company between those 2 companies are very close to each other as well. So we are very much expecting that, that can create good synergies.
Any other questions from the floor?
[indiscernible] From [indiscernible] newspaper. For the term in business performance, you mentioned that you're happy and beginning to see the summit. So I think this is the most positive presentation of the earnings results since you started during that or leading that earnings announcement, so I just wanted to ask here your position for the future investment, as on showed interest in investment, the size of several trillions yen. So backed by the great performance. So you are more aggressive or more of saving more in terms of future investment. It's not just because the great performance. So what does great performance mean?
That means that our financial stability is even more even much stronger. We talked about the capital allocation in my presentation. And more powerful, the financial stability gets and the bigger opportunity that we can tap into I'm not saying that we see a big opportunity now. But now we are more ready than before to tap into new opportunities. We are not going to do all at once. We are going to be opportunistic. And rather than aside, we want to see whether a deal or potential D is great or not. For example, investments in open AI, the size, big or not. From our perspective, size-wise, it was not a huge 500 million. But as a deal as significance. It was a big deal. And again, we are fully ready, and we are ready to tap into a new opportunity. Having said that, the financial policy is solid because you may start asking how much you spend for investment. We will invest within range or within the capacity that we can keep supported by our financial stability.
Any other questions? If not, then we have [indiscernible] another person. Person in the very front tow, please.
[indiscernible]. I have 2 questions. First, U.S. presidential election was there. And the second, Mr. Trump administration and tariff issue potential towards China. For you, SoftBank Group and any impact to portfolio companies there. My second question. earnings also announced second quarter has a contract with SoftBank Group was also recorded, which was 4400 million. And what was the content of this contract.
So first question, I will answer that. And the second question, Ian, go ahead. So first question. Presidential election, we have not much of the comments on that. So Mr. Trump being President-elect. And also I hear the news regarding how they're going to have a China policy. But we are the company of investments and of course, we need the management of the portfolio company in China. And also, we are very much slow down when it comes to the investment in China, new investment in China as we mentioned in several times in the past, we don't have any business operation in China. So we don't have any direct impact to our business performance of our company itself. However, indirectly, our portfolio company, depending on the China policy by Mr. Trump in the future, there may be some damage or negative effect. And for those, we would like to pay a clear -- close attention and monitor them.
And for the second, Ian, would you please go ahead?
Yes. Thank you for your question. Yes. So during last quarter, we signed a multiyear agreement with SoftBank to provide them with some technologies and services. This is an agreement very similar to other contracts that we signed with customers. And also similar to other agreements we signed with customers, it's not really for us to disclose the contents of that contract nor what end markets are being targeted. That is something we would normally push back to the licensing company. So maybe, yes, Goto-san, might like to comment.
Well, we believe this is 1 of the transaction similar to others. So I think that you answer everything, Ian.
Any more questions from the floor? If not we'd like to conclude the SoftBank Group Corp result announcement for 6 months ended September 30, 2024. The video footage of this meeting will be distributed on demand from our corporate website. Thank you very much once again for joining SoftBank Group Corp. earnings results announcement for 6-month period ended September 30, 2024.