SoftBank Group Corp. (9984) Earnings Call Transcript & Summary

Thank you very much for waiting, everyone. Now we would like to start the SoftBank Group Corp. Earnings Results Announcement for the fiscal year ended March 31, 2022. First of all, I would like to introduce today's participants. From left, Masayoshi Son, Chairman and CEO; Yoshimitsu Goto, Board Director and CFO; Kazuko Kimiwada, Senior Vice President and Head of Accounting Unit. Today's announcement is live broadcast over Internet. Now I would like to invite Mr. Son, Chairman and CEO, to present you the earnings results and business overview. Mr. Son, please?

My name is Son. Thank you very much for joining today. So about 2 years, we've been experiencing this COVID-19, and we've been experiencing confusion in the world, in the market and also Russian invasion of Ukraine starting from this year. With those situations, I believe that the market in the world is in confusion. Equity market has been impacted largely. Also, we've been seeing inflation many places around the world, and interest rate rise due to manage the inflation, which also again impact the equity market. Under such circumstances, what we should do at SoftBank Group, that's something I would like to explain to you with my presentation. So let me go into my slides. In summary, defense. As I mentioned earlier, we are in a confusion in the world. Under such circumstances, we, SoftBank Group, should be taking defense position. So that's the clear position we should be taking at this moment. Just about 2 years ago, when COVID-19 started seeing in the world, we have announced JPY 4.5 trillion monetization program. Also, we announced our share buyback and we have been executing those initiatives in steadily manner. Now that, again, we believe that we should be taking this defense mode, there are 2 things for this defense mode. One is continued monetization so that we have enough cash position on our balance sheet. And for the new investment activities, we would like to make sure to keep stricter investment criteria. So that's a kind of a summary for today. For details, I would like to use my slides to explain to you, as I mentioned in the beginning, COVID-19 and the Russian invasion of Ukraine. More specifically, 500 million has been impacted with this COVID-19. It became a global pandemic. And because of this -- as a result of the Russian invasion of Ukraine, crude oil prices raised to -- of 38%. Natural gas price became 117% increased. So as wheat price consumer price index in the United States, and at the same time, the same phenomenon has been seen in the another -- rest of the world. To manage such a situation, a long-term interest rate has been increasing to the certain level exchange rate that we've been seeing the record weaker yen. NASDAQ, 27% down in terms of composite index. Under such situation, I believe concerns from the people about SoftBank, I think there are 3 things: one is the decline in equity holding value; or too much debt in SoftBank; or cash position, is it safe? Those are the 3 things that many people may have as a concern over SoftBank. And this is a fact. Facts are, net asset value-wise, we have JPY 18.5 trillion with us and loan-to-value 20.4%. This is a second fact. And third of all, cash position that we have, JPY 2.9 trillion. So these 3 are the facts or the answers for those concerns that you may have for SoftBank. And mainly from these 3 facts that we would like to -- I would like to explain to you more in detail of our current status. Net income, which has already been announced at 3:00 this afternoon, minus JPY 1.7 trillion. The year before last year was negative JPY 1 trillion, and the last year was positive JPY 5 trillion. So JPY 1.7 trillion negative here, but we had positive several trillion yen. So which has quite that dramatic movements from upside to downside, but especially for this fiscal '21, full year net income was a negative JPY 1.7 trillion. Accounting gain for more important index that we focus is loan-to-value and the net asset value. So these 2 are something that we see as a very important index. So the Vision Fund, which is mainly for our net asset value calculation, it's now down to JPY 3 trillion from JPY 6 trillion. So delta is JPY 3 trillion. But still, to the principle we have invested, we are still seeing this gain of JPY 3 trillion. So that's another fact. Those increase of unrealized gain or realized gain in total with those increasing gain has been decreased, which is fact, but still, we still have JPY 3 trillion -- but this delta is JPY 3 trillion. So compared to JPY 1.7 billion negative of net income, this is dramatically decreasing. So actually, this is even more bigger issue compared to accounting loss in detail by region. First of all, China, the gain we have been seeing in the past has been going away and now is showing negative figures here. In Vision Funds, new investment in China has been decreasing. Therefore, risk for new investment in China has been carefully managed and studied, so that's our current position for investment -- new investment in China. So careful steps does not mean zero. We believe that there are still a lot of great companies. So for those companies, we still like to invest, but relatively smaller size. In United States, that has decreased. Asia, Europe, those are also declining. So it's kind of a worldwide phenomena, especially starting from this year. With this Russian invasion of Ukraine, equity market has been largely impacted and declining, and that has been also influencing Vision Funds' results. Like I keep saying, rather than income from accounting perspective, NAV and LTV are more important. Net asset value and loan-to-value, those are the most important indicators for SoftBank Group. In terms of NAV, JPY 18.5 trillion. Equity holding minus debt, that's net asset value, which is JPY 18.5 trillion, and NAV is evaluated every year. And JPY 18.5 trillion of NAV does not include debt owed. And our market cap as of end of March was JPY 9.2 trillion. That means we are experiencing a 50% discount. Looking at the history of NAV, as you can see, compared to the peak, we have seen decline. However, we still hold plenty of net asset value. More in detail, in terms of net asset value, as you can see on the slide, Alibaba lost a lot. I mentioned earlier, Vision Fund saw a loss as well. And Vision Fund accounted for about 50% of NAV. Up until 2 years ago, Alibaba accounted for 60% of our NAV. So our NAV depended on Alibaba in terms of NAV before, but now Alibaba accounted for only 22% of NAV. So-called China risk or Alibaba risk, we have been able to reduced reasonably. And if you take the orange portion out of this chart, you can see how bigger proportion is occupied by Vision Fund. And as a total, you don't see a huge decline. So again, before, we depended on Alibaba maybe too much, but now we have been distributing and diversifying since then. And Vision Funds include 100 or so portfolio companies. So again, we did diversification. If the global market declined dramatically, accordingly, we will see loss of our value. But again, we don't depend too much on a particular country or a particular company anymore. Like I keep saying, NAV and LTV are the most important indicators for SoftBank. So the second one to NAV is loan-to-value. Net debt divided by assets, the loan-to-value is 20.4%, that's a fact. Again, looking back the history of LTV, we listed SoftBank KK or SoftBank Mobile and sold part of the shares, and since then, LTV has been constantly below 25%. Our policy is to run the business with LTV below 25% as business as usual. Even extraordinary situation should be less than 35%. That's our policy. 35% is our red zone, if you will. 35% is 1/3 of our assets. And if that level is a 1/3 of our asset, we should be fine. But again, for business as usual, we want to keep as low as 25%. Last time we made announcement of earnings results, it was 22%. But now we are saying 20.4%. That means it's an improvement. Many people said that since the equity market declined so dramatically, our asset should have decreased. Then the LTV could be over 25%. That's some concerns that many people may have. But again, we have a strict guideline and loan-to-value, instead of deteriorated, it improved in the last 3 months. In terms of cash position, our policy is to have sufficient level of cash position, enough to take care of redemption for over 2 years. When you talk about bond redemption for the next 2 years, we should have JPY 1.3 trillion. Against that, we have more than double in terms of cash position, which is JPY 2.9 trillion. So we are managing our business in a very secure and safe manner. The equity market won't decline forever. So when it's in the downward trend, it's important to have enough cash position under the circumstance. And SoftBank share price has been discounted. And in fact, it has down. That means we have an opportunity to buy back our shares. And as you know, we made announcement to share buyback. That was to buy our shares up to JPY 1 trillion by November this year. And we have been in good progress, and we are now 45 -- excuse me, 43% progress in 6 months. The shares will be canceled after we purchase our shares. Consequently, NAV per share should be better. So again, share buyback program has been going pretty well. While we are repurchasing shares, how were we able to improve loan-to-value? Let me explain. If you asked us, haven't you done any new investment, in fact, we did. About JPY 5.2 trillion of investment we made, but also we have done monetization program for about JPY 5.6 trillion. So we did both new investment and monetization. That means new investment is done with the money that we monetized. So that kind of ecosystem is working well. So we make sure that we won't affect our debt. So when it comes to new investments, we monetize it first. And with that gain, we make an investment. When we make a new investment, we usually invest in public entities. So Vision Fund makes new investment into public -- excuse me, private companies. And when private companies go listed, then we do monetization from those exited businesses, and the gain that we have will be used for new investment. Again, that ecosystem is working. When it comes to new investment, we are more selective. Why? Because we want to have a strong defense position, like I said at the beginning of this presentation. Since the world is in chaos, we want to make sure that we have plenty of cash position and we have a strong defense position. So from exited businesses, instead of making new investment randomly, we want to make sure that we have enough cash position. How do we do? We manage a pace of investment. We are more conservative when it comes to pace of new investment. I believe that our global private funds are doing the same. Why? Because listed companies' values are evaluated every day. So valuation is corrected almost every day. But when it comes to private businesses, their values are not evaluated every day. So it's difficult to change the mindset in terms of the values that they have in the private companies that they have. So if the value was higher back then, they wish investors would invest in those businesses at higher value. But when it comes to listed companies, since their values are valued every day, it's difficult to attract new investments. So again, not only SoftBank but also venture capital and private equity funds are in the same circumstances. But in 1 year ahead to 3 years ahead, listed companies' equity market should be improved. And the private businesses in the meantime will keep growing. So the balance of values and opportunity should come in 1, 2, 3 years. And once the opportunity comes, we can resume investment in listed companies. So depending on the circumstances, we are flexible. We are opportunistic. Again, now is the time for us to have a strong defense position. And when it comes to approved investment amount of Vision Fund, in fact, we have 475 portfolio companies in the Vision Fund. And compared to before, ticket size per business is being smaller, so that's the recent trend. So number of IPOs have been growing in the last 5 years, every year doubled. But for the last 12 months, number of IPOs will be smaller. That's my conservative view. So again, we keep conservatively run the business. And this is the distribution of Vision Fund because we have JPY 3 trillion of the cumulative gain and you may wonder, are those all unrealized gain. But actually, partially the share has been sold and we return in cash, and the distribution total is JPY 5.3 trillion. Vision Fund 1 and 2 total, as you can see, JPY 5.3 trillion. It's not that all of them coming to us, actually that some of them are going to our partners. So first, we distribute to our LPs. And then we will be receiving our -- based on our equity ownership. Vision Fund 1 and 2 in total, you can see yellow portion and orange portion, those are the return to SoftBank Group as on distribution. Not only Vision Fund, but also there are other assets or the public securities such as Sprint, T-Mobile and some others that those are also being sold or monetized. And in total, after fiscal '18, in the past 4 years, we have already monetized JPY 14.8 trillion, either sales or monetization. So new investment, when it comes to new investment, we are recycling of those money that have been monetized of our existing assets so that we are more conservatively with this defense mode that we would like to keep ongoing. So monetization will be continued. And also with this strict investment criteria so that we would like to make sure not to exceed 25% of LTV so that we can have a safely manner of the driving of our business. So after you hear this page, you may disappointed. It's not like you, Masa. It's not like SoftBank. Are you okay? You don't want to speak more about other side. So here, we also like to share with you that we don't forget about our opportunities. So how we going to find, and when or what? Without using new money as much as possible, we would like to use what we have and find opportunity. That's something we would like to do. That mainly coming from Arm. In the -- in 5 years ago, we acquired this company and SoftBank Group became 75% owner, and SoftBank Vision Fund, 25%. So group overall, that we have 100% of this company. And Arm is kept on growing compared to when we acquired this business with these 5 years. Arm has been growing continuously. And actually, annual Arm-based chips shipped became 29 billion chips. And this, I believe, is going to even grow exponentially, mobile market, IoT, automotive, cloud. In each sector, each segment, Arm is actually taking a very large market share. Actually, right after our acquisition of this business, market share of mobile was much smaller. IoT was also the same. Auto was also the same. Cloud was almost 0 back then. But in these past 4 years, R&D was fully invested. And from back then was the version 8, which was Arm's products when we acquired. But starting from last year, version 9 shipment has started. In the version 9 case, unit price per chip is much higher compared to version 8 in terms of royalty. So using this version 9, for example, 5G mobile phone is almost using version 9 chip. And this proportion of version 9 usage is increasing, which is also apply the same to auto or cloud. And actually, high-function, high-quality Arm chip has been shipping to these segments. So that it used to be flat in terms of sales, but starting from last year second half is increasing dramatically, and we expect that this will grow even further for this year and next year. As a result, which -- when we acquired this business, the adjusted EBITDA was about USD 800 million. And now went down by half back in fiscal '19, USD 365 million. But in the past 2 years, actually growing dramatically and almost record high in terms of adjusted EBITDA. When it comes to fiscal '22, '23, actually, we are expecting they will be doing even better, even higher. That's how I'm convinced this moment because they have already a good pipeline with the major clients. And based on such pipelines, we will be able to predict the good numbers of shipments so that we can see a good picture for the business in the future. And we are convinced that it is going to be making a great growth. So from version 8 to version 9, so in each version, it's been used in various products, but the key to further growth for this upgrading of version is multi-core. When you hear core, you make -- you can interpret to the 1 engine for 1 piston. So 1 core became 2 cores, became 4 cores, became 8 cores. So the core has been increasing. So it's like 8 pistons engines in automobile case. So just about 10 years ago, it was single core, so starting from a single core to dual core, quad core so that the number of cores has been increasing along with this version update. And now that it's becoming much, much higher function and has a hyperscale being used for cloud, automobile, those is actually now have 144 cores. So for 1 per chip, 144 cores installed. So that's the kind of a product used for the cloud. So Arm CPU, actually low consumption of the electricity. However, computer power is actually -- you may fear or you may wonder that the performance is inferior to Intel or somebody else. But actually, that's not true. With this multi-core -- by improving this multi-core, low batteries or the consumption of battery, but actually computing power is improving further more. More specifically, power -- computing power is actually the key for the cloud service or a key for the automotives. And for that, we believe Arm is going to be solo players or a strong player. Smartphone and IoT, a lot of devices will have AI capability in cloud and automotive. It's like supercomputers running on the road. So those are the trends that we are looking at. So under that trend, Arm should be the key for further growth. Like I said earlier, SoftBank -- now is the time for SoftBank to be defensive. So it's important that Arm does not need additional capital requirement, capital required from SBG. So from personality perspective, I want to be offensive sometimes, not always being defensive, but as a business leader. When I think about Arm's next growth opportunities, in fact, I spent a lot of my time, Vision Fund and Arm growth strategy. We were talking about selling Arm to NVIDIA, but since we couldn't get green light from regulators, so taking that opportunity, we and myself spend my energy and time to figure out how best we can grow Arm further. So in the future, when we look back, we want to be proud of ourselves having Arm in our family. Arm is making profit and Arm does not require CapEx. So as you go offensive, Arm should get more return. So Arm does not require additional capital. So looking at current SoftBank position, I should spend my energy and time into Arm, which is reasonable. Arm is preparing for future IPO and the process should proceed. One obstacle for the future IPO was Arm China. The head of Arm China sort of rebelled and the Board, even though released him 2 years ago, the decision made by the Board 2 years ago to release him, procedures for that decision were not going well in China. And the head of Arm China kept control of the business. But we have seen dramatic progress in the last 2 weeks. And 2 co-CEOs were officially approved by the Board. And the seal of representative was authorized by the Chinese government. With that, Arm China's now in a normal course. So we have seen a big improvement and progress. In the past 2 years, we were not able to audit Arm China. But going forward, audit firm will scrutinize Arm China. With that, the only obstacle against Arm's IPO was addressed. So Arm's performance is good in the first place and Arm was listed 5 years ago. There is no reason why not Arm going public. So going forward, we will proceed with procedures of Arm's IPO. By the way, well, I keep saying that defense, defense, but in long term, Information Revolution won't stop. Our equity holding and assets and our group companies, for those things that we have, the future is uncertain forever? No, I am confident about the future of our business. Let me explain why I'm confident. The Internet. The revolution of Internet started sometime around 1994. If the value back then was 1, Internet industry index grew by 30x in less than 10 years. That's why many people would say that Internet bubble, net bubble. In less than 10 years, the value grew by 30x. There were net companies that did not make profits, but their valuation went up. So back then, many people say that was crazy. In fact, the market tanked. So the valuation of the Internet industry tanked to 1/3. But from a big picture perspective, in 10 years, it grew from 1 to 10 in the end. It was not bad; well, worse than 30, but still, compared to 1, 10 is 10x bigger. But from the people who bought those businesses at the time when the market cap was 30x -- and people might call someone like me a liar, and bold liar, and maybe I am careless, but I am not a liar -- anyway, 30 went down to 10. But later, in another 10 years, it grew from 10 to 100. Again, in less than 20 years in total, the market cap grew from 1 to 100. But after the, what we called Lehman shock, it down to 50 from 100. But again, compared to 1, 50 is 50x bigger than 1. And people who sold Internet businesses at the time of Lehman shock, but look at this, in another less than 10 years, the market cap grew from 50 to 2,400, or maybe a little bit over 10 years, grew from 50 to 2,400. Compared to the peak 100, it grew 24x. And from that time, it went down to 1,800 now. So from SoftBank's perspective, Vision Fund valuation or NAV, we have seen decline. But we have seen those pink 3 times in the history. But in the middle of those pink period, whether you want to sell the stocks or buy the stock, buying the stocks, those people were brave and their bravery was worth doing that. And decline from 2,400 to 1,800, for me, it's a peanut. I believe that from now on, Information Revolution will progress further. Why? Because Arm-based chip set grew exponentially and AI users, AI penetration, computing power, all those things have been increasing exponentially. So the number of users and computing power and cloud, value of them should not be affected by onetime fluctuation of employment or market price or foreign exchanges. More fundamentally, evolution of technology won't stop. Exchange rate, interest rate change and change take place in a short period of time. But when it comes to change for a longer period of time, it's evolution. So look at the forest, not look at the trees. We believe long-term evolution and we will continue committed to Information Revolution. To summarize, SoftBank's position is defense at the moment. Without spending new money, we also go defensive and offensive. NAV, JPY 18.5 trillion; LTV, 20.4%; and cash position, JPY 2.9 trillion, which is double the amount of bond redemption for next 2 years. So while keeping defense position, we go offense without spending new money and we keep committed to Information Revolution - Happiness for Everyone. Thank you very much.

Now we would like to take questions. First, we would like to take questions from the floor. [Operator Instructions] Now we would like to take questions from the floor. Please raise your hand if you have any.

Ichikawa from Yomiuri Newspaper. I would like to ask you about the investment policy. So you are actually being defense. But if you keep defense mode for this fiscal year, that's going to damage your next fiscal year and on for the -- any results. How are you going to -- do you have any measures for that? And another question from me is that equity market, especially volatility is high because of those new businesses, I think that you can't help it. And I understand the situation. However, seeing such a volatility, I believe there are concerns by the shareholders. So to actually keep your performance steady, you have -- do you have any plan to increase your portfolio in public securities?

Thank you for your question. We didn't stop -- well, we don't stop our challenge. Actually, we just make it smaller. There are some shining stars here and there. So we've been selective for investment activities. And for next fiscal year and on, we have 475 portfolio companies and the umbrella of SoftBank Vision Fund. So those companies can also grow and being fruitful for the results. So I think we are still convinced we could -- we may not be able to have a new bullet or new pipeline for this fiscal year or the last fiscal year, but 1 to 2 years later, we believe that the public market or IPO market is going to recover. From my personal view, in that moment, we believe that we'll be able to come to the offense mode once again. So we would like to well manage our defense mode and offense mode based on the situation. And to do so, loan-to-value, LTV, is very important. We need to keep this loan-to-value managing less than 25%. So that financial discipline is going to be kept, and while keeping such a commitment or while keeping this discipline, that we would like to see the situations for our mode change. Because of private securities or private portfolio, we have some volatility. But instead your question is, do we have any plan to do the public securities? But actually, public securities is the one that have been -- that hit by the volatility. And there were ratio of decrease in value compared to the market's average decrease ratio is something similar. Therefore, even if we have invested in public market, but still I think that the result was the same. Rather, we had a vehicle called SB Northstar to diversify our portfolio, changing from the kind of -- from focus of concentration for Alibaba. And as a result, actually that we have seen the decrease in Alibaba holdings, that's why that we have more diversification. SB Northstar, we are scaling down not much activities. That's the answer for your question. I hope that answers your questions.

Next question, please, from the floor.

[ Lee ] from Bloomberg. Question about pace of investment. You said that you're making investment more conservatively. If you slow down the pace compared to the previous year, how much in terms of pace and how much in terms of the amount of investment? That's the first question. And second is about Arm IPO. Timing and valuation that you are expecting now, if you could share your views with me, that would be great.

Compared to the previous year, remember the graph I showed you earlier, in the latest quarter from December to March, compared to the previous quarters, we have made it smaller. Peak was Q1. We made investment about JPY 2 trillion. But Q4, you see a huge decline compared to Q1. Compared to the investment we made in the last year, I would say half or even lower than half of the investment. And of course, it depends on our LTV level and investment opportunities. We strike a balance when it comes to making investment. But I would say, compared to last year, the amount of new investment will be half or could be as small as a quarter. Now talking about Arm. Again, we're going to keep preparing for IPO. But the timing, well, I would say as early as possible, but I won't say more specifically, otherwise, my legal team would give me hard time. So I'll just say foreseeable future. About the valuation. Well, a lot of investment banks are giving us their expectations. While Arm's performance is pretty good, but again, before IPO, I'd rather not comment on the valuation that we are expecting. That's, again, a strong feedback I get from my legal team.

Next question.

My name is Nakagawa, Toyo Keizai. I have 2 questions. First, you mentioned earlier regarding SB Northstar, so you issued a press release today, so JPY 900 billion which is unrecoverable and 1/3 is from you. So public securities investment by Northstar, why do you think it comes to this end? And second question is the stricter investment criteria. More specifically, what part you would like to make it more strict when it comes to the criteria? And I'd also like to ask you, is there any financial down round dependent of the portfolio?

The reason we established SB Northstar, because 2 years ago, the Alibaba value is accounted for a core almost 60% of our total assets. So we should diversify. And one of the ways we can diversify is the investment in private securities by SoftBank Vision Fund. But we also like to diversify with public securities as well. So that was a kind of a background for establishing SB Northstar. However, public stock investment does have some risk. And also there was a new initiative for SoftBank Group as well. So that is why I also took risk of 1/3 of such -- so that we can carefully manage this activity. And we did get some damage. But if we keep on concentrating in Alibaba, because Alibaba share price has been even declined to now about 1/3 compared to back then, therefore, the amount or the ratio based on the share price decline at Alibaba, if we kept holding the same ratio of Alibaba, should be quite large. So amongst the market overall declines of the situation, I believe that SB Northstar has experienced the same level of the declines in the equity value. In the mid- to long-term period, we believe, regardless of private or public, once that we start seeing more and more opportunities, then that there must be a kind of a role that SB Northstar should be playing so that we are not seizing SB Northstar or anything. We just keep it open, but not making a big move. We would like to carefully watching the market. And when the time comes and when the time is right, then that we will again like to diversify our portfolio with public securities through SB Northstar. And your second question about our strict investment criteria. When we invest in private securities, this company in the industry, is there any peers which is a public company? So when you have any peers in public securities, their growth ratio compared to such trend, how much the value should be for the company? That's we call it comp, so that compared with the peer company that we check the value. And also, our business plan that this company issue, how far should we trust their business plan that we do have some surveys or do some research that is trust for business plan. Well, is it a dependable business plan that we can? So by having such a strict criteria, we would like to become even more careful about the research and also due diligence for the portfolio companies. I believe that's necessary. So that is why for the fourth quarter, amount of the investment was about JPY 300 billion. So it has been kind of reduced because of such a strict investment criteria.

Wada from Nikkei Paper. Two questions. First, March 2020, you did a JPY 4.5 trillion monetization program. Back then, your performance was not good, and it's not good either this year. So I wonder if you have a plan to do another big monetization plan. Back then, LTV was not high. But what's the difference between now and then? The second question is about Arm IPO, I believe that you plan to make it listed by the end of fiscal year 2022. But since the equity market is weak, you may not be able to expect high valuations. So do you have a plan to extend the time line maybe for next year or further?

Thank you. First, we made announcement of JPY 4.5 trillion of monetization program 2 years ago. And why we made investments as much as JPY 4.5 trillion or something? Also, we exited or monetized about JPY 5 trillion. See this slide again, please. We made an investment, JPY 5.2 trillion. But at the same time, we monetized JPY 5.6 trillion. Two years ago, we announced JPY 4.2 trillion of monetization program. But this time, even though we don't have such announcement, as you can see, JPY 5.6 trillion of monetization is being done. So again, ecosystem starts working. Even without making an official announcement, we constantly do monetization. And when it comes to new investment, like I mentioned earlier, for new investment, we have a stricter criteria. So in 1 year period, this blue should go smaller and the yellow on the slide continues. From that perspective, loan-to-value should improve, and we have enough cash position, and we have enough financial resources to make an investment. So even without such an official announcement like we did 2 years ago, it's business as usual now when it comes to monetization. So that's I would like you to understand how it works. And the second question is about Arm IPO. Again, Arm's performance is extremely well, even at the pace of exceeding our internal budget plan, but market moves. So at the time of IPO, if the market then is not good enough, maybe we may extend the time line by 3 months, 6 months. We don't have critical target. So Arm's business performance is going well. And any time we should be ready for ARM's IPO.

Next question, please.

My name is [ Shin ] from TV Asahi. You mentioned about interest rate and exchange rate. That's the kind of a onetime change, but you believe in the long-term progress. But we've been seeing the lockdown in Shanghai, in China. Chinese economy is being very uncertain. So do you see any impact to your business performance from such Chinese economy or Chinese status?

Yes, if it was 2 years ago, when we just started the beginning of COVID-19, our holdings in Alibaba accounted for 60% of our assets total. But now it's 20%. Actually, other than Alibaba, it's accounted for 80% and also Chinese portfolio -- Chinese companies in Vision Fund portfolio is decreasing as well. Actually, other than China portfolio is the majority for Vision Fund investment too. So in the past 2 years, actually, we've been receiving quite a large impact from China or Chinese situation, but for the future, because we have reduced the China dependency amongst our portfolio, therefore, we believe we don't have to worry too much about the situation in China. Actually, the reason is because the exposure other than China is majority now, net asset value, loan-to-value, those calculation. Arm has its value as private securities so that this is a very conservative calculation for net asset value and loan-to-value now. Once Arm go public, then the value, what we're calculating now for net asset value and loan-to-value will be much improved. That's how I see and convinced. So that proportion actually is going to be taken more compared to Chinese concentration. Because Arm will be probably, I believe -- I assume that Arm is going to be the largest exposure amongst our portion.

[ Kurimoto ] from Nikkei Paper. 2 questions. First, China risk. So you don't have a plan to further reduce China exposure? And secondly, what will be the most appropriate distribution in terms of regions? And second question is Arm IPO. Even after IPO, would you like to keep control of Arm? And how much you anticipate? And Arm's IPO might have some impact on your financial position. So what's your view?

The first China, mostly Alibaba, again, declined from 60% to 20%, that's our independency to China. And of Vision Fund cumulatively, I believe that China exposure to less than 30% as of now. And for new investment, even smaller. So again, dependency on China keeps less and less and other portion will be bigger and bigger. For Arm, Arm's business performance is pretty good. And even if IPO gets delayed by 3 months, 6 months, even further, our cash position is JPY 2.9 trillion. And we have strict criteria for new investment. So excess capital will keep piled up. So again, even Arm IPO gets delayed, which I don't believe, but even if Arm IPO timing gets delayed, so what, from my perspective. It's not a big deal. After IPO, SoftBank, 75%, Vision Fund 25%, that's the current holding, and of Vision Fund, about half is held by SoftBank as a common stock. So SoftBank's control should be there, even after IPO, so majority stake will be still kept by SoftBank even after IPO. So I will take 2 more questions from the floor. After then that we would like to take questions from the Zoom.

My name is [ Honda ] from Nikkei Business. I have 2 questions as well. First is a technical confirmation I would like to make regarding the financial policy. So after April of this fiscal year, market is volatile, and LTV -- latest LTV figure, if you can share with us as of today, that's something that is very helpful. And cash JPY 2.9 trillion, how much are there for the commitment line? If you can share with us, I would like to hear. My second question is kind of a big picture question. In the very last page of the presentation, you are looking at kind of a bird's view and you are taking a big picture for the future. So when it comes to such a big picture, in the past 3 months, because of the Ukraine situation, economics or economies or securities framework may change. But will those be gas for your AI revolution or break for your AI revolution?

For LTV, we disclose every quarter basis. So that's the policy for the company. So we don't share with you in the middle of the term. But as of March and as of today, not much difference that I can say for now. So it's not that deteriorating heavily or anything. Actually, mid- to long term, we are expecting to be able to improve the situation. And the commitment lines for the -- of the cash about JPY 450 billion under other currency, and we haven't used any credit lines -- in Japanese yen credit lines. And for long term, even if we can see some ceasefire by Russia, but the economic sanction may continue, so this is not something all of a sudden disappear. We believe that this factor for inflation may continue. And we do -- I do expect the continuous increase in rate. That's how I see in conservative way. Under such circumstance, world or the market starts building in those new situation a supply of new type of energy sources like [ shale ] oil. So that's kind of a shifting is going to be happening. Oil, gas, electricity in the coming 1 to 2, 3 years, new -- based on new situation and assuming such situations continue, the world is going to be adapting the new energy source or a new methodology, then those volatility is going to come down. So that's something that we have seen in the past. So the people's wisdom will be used and also developed based on or adjusting to the new situation so that I don't believe we need to be pessimistic forever. But at the same time, having said that, I don't think this is going to solve in a short-term period. That is why that I believe we need to be in defensive mode in the meantime. But when it comes to technology revolution, I believe this is going to be even more developed going forward. After COVID hit, online demand has increased dramatically. And such a revolution is irreversible so that people start using much more online shopping, online education, metaverse, online entertainment. Those kind of things is going to be online, and that use will be increasing or evolved furthermore. And even in other ecosystems, I believe that those will be changed or replaced to online basis. That's how I see the future going. So that's why I think Information Revolution in this industry will develop, not depending on traditional method or traditional way. I think evolution will go on. That's why I think Arm's importance or Internet AI's role is going to be even more greater.

Last question from the floor.

[ Oda ] from Jiji Press. Two questions. First, your prospect for the market. You said that we don't have to be pessimistic forever. But the tech companies in the NASDAQ market have been hit dramatically. So how long will it take? And how do you think are you going to -- are they going to get improved? That's our first question. The second question, about the Twitter bought by Elon Musk. So from your perspective, what's your view as an investor? And is there any possibility that you get engaged, whether it's an investment or not?

First, to your question about market forecast. The bubble of the net companies and Lehman shock, at those huge events, how much did the equity market lost value? It went down by half or to 1/3, but they got rebounded, and even rebounded further from the previous peak. And compared to traditional industries, high-tech industries got rebounded remarkably. Growth companies have better leverage in terms of multiple. So for those growth stocks, they may hit hard or harder than traditional industries. But when it comes to rebounding, not only coming back to previous peak, but further. They get even more in terms of value compared to the previous peak because things get adapted to a new normal. So again, for the next 1, 2 years, maybe the market continues to be in chaos. But after that, it should get rebounded dramatically. Well, looking back the corona pandemic. So again, tech companies were hit hard, but they got rebounded dramatically when the COVID-19 pandemic gets stabilized. So I believe that tech companies will get rebounded even more than before. About Twitter and Mr. Musk, I think Mr. Musk is a great entrepreneur, and he is one of the most respectful entrepreneurs to me. And he, I think, can grow Twitter in his own way. But from SoftBank's perspective, whether as a direct investment or not, at the moment, I don't have any plan or any view.

Now taking a question from online, Zoom's participants. [Operator Instructions] So we would like to take a question from [ Katahira ], NewsPicks.

This is [ Katahira ] from NewsPicks. SoftBank Vision Fund 2, I have a question about them. Looking at the financial statements, seems like the exact amount after investment is negative. Well, how -- what is the status of performance result for the Vision Fund 2 activity so far? And also, how do you feel about that?

Vision Fund 2 is slightly negative. I think in principle, investing in private securities, but because public market is declining in value, even if they haven't had any down financial round, but because we voluntarily decrease the value of the companies along with this peer comparison. So that's because we are being conservative for the view from Vision Fund 2 and the new investments in Vision Fund 2 that we reduce the value for the calculation. 6 months or 12 months or 18 months since the investment that was made. And they haven't had any up rounds yet. So when you don't have any new up-rounds, meaning the situation is flat. But peer public names comparison in -- reduced the valuation along with that. So that's why you see some negatives in the results. For Vision Fund 1, they have already spent 3 to 4 years after our investments so that they have experienced some up rounds or IPO events. So that's why they are resulting in some negative, but because Vision Fund 2 it's just -- it's not yet spent enough time. So that's why, along with this comparison compared to peers, that we have increased the value of those.

Next, from the Zoom, Mr. [ Owada ] from Nikkei BP.

About Information Revolution - Happiness for Everyone, to that, you mentioned that technologies fundamentally keeps evolving. But when it comes to happiness for everyone, how much technology can contribute to make people happy? What's your view? Because of the war and COVID-19, there are a lot of people struggling around the world. So how do you help making them happy?

Thank you. Every act by humans may not end in something happy or pleasant. There are always some challenges and problems like traffic accident, diseases, like wars. But for those problems occur, with Information Revolution, solving those issues or problems at higher pace, I think Information Revolution should help in solving problems faster and better, for example, development of vaccine and drugs for COVID-19. Thanks to AI technology, the development of vaccine were successful in a very shorter period of time. Usually, it takes as long as 5 years, but less than 1 year, vaccine for COVID-19 was developed. Without AI or without Information Revolution, we could not have add drugs or vaccines for COVID-19. Vir Bio, for example, which we bought, the company have developed drugs for COVID-19, and they went through a medical test. And they've got authorization by the regulators in the U.S. And autonomous driving goes deeper and deeper and get wider and wider. And I believe that the traffic accidents will be lesser and lesser. For example, in Japan, a lot of aged drivers may cause traffic accidents, but with AI and autonomous driving technology, even aged drivers can drive without causing traffic accidents. And for war, well, pressing the button of a weapon is done by a people -- a person. So, so long as people are on earth, maybe there always will be a war, but Information Revolution, I believe and I hope should contribute to people's happiness.

Thank you. Thank you very much. For the interest of time, this was the last question for today. Thank you very much for your participation. So this concludes the SoftBank Group Corp. earnings results announcement for the fiscal year ended March 31, 2022. The video footage of this meeting will be distributed on demand from our corporate website. Thank you very much once again for joining the SoftBank Group Corp. earnings results announcement for the fiscal year ended March 31, 2022. [Statements in English on this transcript were spoken by an interpreter present on the live call.]