GentleBank earnings report Q1 FY 2024

SoftBank Group booked a 1.9 billion yen ($12.9 million) investment gain on its Vision Fund tech investment arm in the company’s fiscal first quarter ended in June, swinging back into the black.

Gains in some of SoftBank’s Chinese portfolio companies — including TikTok owner ByteDance — helped offset losses from other firms like AutoStore and Symbotic.

However, the Vision Fund segment as a whole posted a 204.3 billion yen loss, after being in profit in the same quarter last year. The segment total takes into account other performance beyond investment, such as administrative expenses, as well as gains and losses attributable to third-party investors.

The Japanese giant also announced it would buy back up to 6.8% of shares available in the company amounting to up to 500 billion yen ($3.4 billion).

In the year ago quarter, SoftBank posted 159.77 billion yen gain in its Vision Fund. In the March quarter, SoftBank posted a loss of 57.53 billion yen in its flagship tech investment arm.

SoftBank posted its first full-year gain since 2021 at the Vision Fund in the fiscal year ended March as it benefitted from a rally in technology stocks and within some of its key holdings.

The Vision Fund’s recent success is also due in large part to the success of the initial public offering of chip designer Arm last year, of which SoftBank owns around 90% of the company.

However, SoftBank is once more contending with volatile public markets. On Monday, SoftBank shares tanked nearly 19% in a day amid a broader fall in Japanese stocks stoked by an interest rate rise from the Bank of Japan last week.

Japan’s main indexes did rebound on Tuesday, however. But global markets remain volatile as investors remain concerned about the state of the world economy and high valuations in part driven by technology stocks.

SoftBank, which itself has been marred by bad bets over the past few years, is trying to position itself to investors as a key player in the artificial intelligence boom. The company’s management have highlighted its investments in companies like Arm and self-driving startup Wayve as indiciations that the Japanese giant is poised to capitalize on the growth of AI.

SoftBank’s high-profile founder Masayoshi Son, who has been largely out of the public eye for a while, returned this year to deliver his vision of AI which he predicts will be 10,000 times smarter than humans in 10 years.

Investment firm Elliott Management rebuilt its position in SoftBank and was pushing the company to embark on a share repurchase program, CNBC reported in June.

For its part, SoftBank said it “has decided to repurchase its own shares as part of its shareholder return initiatives.”

The tech conglomerate grew into one of Japan’s biggest companies thanks to Son’s early bet on Chinese e-commerce giant Alibaba in 2000, which has boomed over the coming years. The firm has been cutting its Alibaba stake since, as it looks to use the money to fund bets on AI.