Softbank Group Q2 profit beats expectations on IPOs, yen strength

Investing.com– Japanese technology conglomerate SoftBank Group Corp. (TYO:9984) clocked a stronger-than-expected quarterly profit on Tuesday, aided by the successful listing of some of its portfolio stocks and by resilience in the yen.

SoftBank’s net profit surged to 1.18 trillion yen in the three months to September 30, much more than Reuters estimates of 287 billion yen. That compared to a loss of 931 billion yen in the same period a year ago.

The firm, which is a major investor in the tech sector, benefited from a boom in valuations this year amid hype over artificial intelligence. The successful listing of its portfolio firms also benefited its top line. 

Softbank’s flagship Vision Fund unit, through which it makes a bulk of its tech investments, clocked a 608.48 billion yen gain on investments in the September quarter.

The firm clocked an investment gain of 1.28 trillion yen on its holdings in Alibaba Group Holdings Ltd (NYSE:BABA) (HK:9988) over the six months to September 30, with a bulk of these gains coming in September after China announced more stimulus measures.

Softbank (OTC:SFTBY) also benefited from increased initial public offering activity in its portfolio. 

Indian firms Brainbees Solutions Ltd (NS:BRAE) and Ola Electric Mobility Ltd (NS:OLAE) both seeing strong IPOs during the quarter, contributing to an investment gain in Softbank’s Vision Fund. 

The firm was also sitting on a windfall from chip designer Arm Holdings (NASDAQ:ARM), in which Softbank holds a 90% stake, listing on the Nasdaq in late-2023. 

Softbank benefited from strength in the yen through the quarter, as hawkish moves by the Bank of Japan and interest rate cuts by the Federal Reserve saw the yen strengthen sharply, albeit briefly, in September. The currency has since relinquished all of its third-quarter gains, presenting earnings pressure on Softbank during the current quarter.