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SoftBank Reports $12 Billion in Quarterly Profit

SoftBank is back in the black
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Francis Scialabba

less than 3 min read

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SoftBank is back in the black. On Tuesday, the Japanese conglomerate reported $12 billion in quarterly profit.

CEO Masayoshi Son says he’s still in “crisis mode.” Back in May, SoftBank disclosed a historic loss of $17.7 billion for the previous fiscal year.

Graphic design is only one of SoftBank’s passions

While I’d love to exclusively dwell on SoftBank slide decks, let’s instead focus on how the company is reducing debt and appeasing investors.

The crown jewel: SoftBank’s first Vision Fund, the largest tech investment vehicle in the world, notched a $2.8 billion gain in Q2. SoftBank’s $300 million investment in Lemonade, an insurtech startup that recently IPO’d, has appreciated by 2.7x. SoftBank-backed BigCommerce also recently went public.

  • Son said five or six more portfolio companies are preparing to IPO.

Pruning the hedges: SoftBank is offloading shares in winning bets, including e-commerce giant Alibaba, and putting some proceeds into stock buybacks. SoftBank also recently said it would sell roughly $21 billion-worth of its T-Mobile stake.

  • The company confirmed it’s exploring a sale or public listing for Arm, the British chip designer it acquired for $32 billion in 2016.
  • But...Fond of financial engineering, SoftBank said it would ditch quarterly operating profit disclosures. The gambit could irk investors.

Becoming more boring: Son says SoftBank is forming a $555 millionfund to invest in publicly traded Big Cos. like Amazon and Facebook.

Vision Fund 1, the SoftBank ballad

  • Big checks to late-stage companies
  • Profitability comes later
  • WeWork and Uber underwater
  • Uh oh

VF1’s flagging performance scuttled SoftBank’s ambitions to raise an even larger Vision Fund 2. VF2 is currently operational with only $38 billion committed by SoftBank. I use “only” because last year, SoftBank said LPs ranging from Kazakhstan to Goldman Sachs were putting in $108 billion for VF2. Those commitments were retracted or put on ice.

Big picture: SoftBank’s investment thesis is still being battle-tested, albeit at a smaller scale.

Keep up with the innovative tech transforming business

Tech Brew keeps business leaders up-to-date on the latest innovations, automation advances, policy shifts, and more, so they can make informed decisions about tech.

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