SoftBank Earnings Paint a Mixed Picture Ahead of Arm IPO

Key takeaways

• SoftBank recorded a net loss for its second quarter, but surprised on the upside for its Vision Fund arm
• The investment firm’s share price closed 0.8% down as investors digested the news
• SoftBank-owned Arm’s IPO could happen as soon as September and be one of the biggest tech debuts ever

SoftBank, the litmus test company for how healthy the investing scene is, surprised on two counts with its earnings beat. An unexpected profit loss was counteracted with a surprise profit for its ailing investment arm, which had felt the heat after the 2022 stock market meltdown.

With a much-anticipated IPO on the way, investors are wary of any upsets in the apple cart — but SoftBank’s earnings call was a chance to reassure the markets. Here’s what went down and how the stock performed at the news.

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What were SoftBank’s earnings like?

SoftBank had a rare miss in its second-quarter earnings, which reported a net loss of ¥477.6 billion ($3.3 billion), marking a sharp departure from analyst estimates of a ¥75 billion profit.

But the kicker was another surprise — a profit for the investment firm’s Vision Fund after racking up a full year of losses before Q2. SoftBank reported an investment gain of ¥159.8 billion ($1.1 billion) as its portfolio picked up after a rough 2022.

There was also news of SoftBank returning to investing. SoftBank’s CFO, Yoshimitsu Goto said the company was “investing timidly, with fear in our hearts” during the earnings call. We can’t blame him for that wording — SoftBank’s Vision Fund lost a whopping $30 billion last year.

SoftBank shares closed 0.8% down at the earnings beat, but the company’s share price has increased 13.3% this year.

What’s happening with SoftBank’s Arm IPO?

Due to go ahead in September, the SoftBank-owned Arm IPO has been the subject of hot discussion for some time. After deciding to list in the U.S. (despite much arm-twisting from the U.K.), the British chip designer is looking to raise $10 billion in its float — one of the biggest tech debuts on record, should it happen.

Goto declined to go into detail about the IPO but commented that the “plan is going very smoothly”. From the outside, it would appear that way — Japan’s Nikkei newspaper reported yesterday that Apple and Samsung plan to invest in Arm’s IPO.

Arm has a $50–60 billion valuation, but that might be under question after the company’s latest financial results. A slowdown in smartphone sales and stacked electronics inventory meant the chip designer made a quarterly loss of ¥9.5 billion ($66.2 million).

The bottom line

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