SoftBank Reports $5.2 bn Quarterly Loss, Cites WeWork’s Impact on Profits

In its latest financial report, SoftBank Group posted a quarterly loss of $5.2 billion, marking the fourth consecutive quarter of negative figures. The Japanese conglomerate faced the brunt of WeWork’s bankruptcy, once considered one of its most promising investments.
SoftBank JapanThe quarterly net loss of 789 billion yen ($5.2 billion) contrasts sharply with the 3.0 trillion yen profit reported a year earlier, a period during which SoftBank reduced a significant portion of its stake in the Chinese e-commerce giant Alibaba.

WeWork, a once high-flying office-sharing start-up, filed for U.S. bankruptcy protection earlier this week, marking a drastic fall from its peak valuation of $47 billion. SoftBank disclosed losses of 234.4 billion yen in the first half of the year attributed to WeWork exposure.

During a briefing, Chief Financial Officer Yoshimitsu Goto expressed disappointment in WeWork’s bankruptcy, describing it as a “great shame.” Goto emphasized the need for the company to learn from this experience to inform its future investment decisions. Despite the setback, he conveyed optimism, stating that he believed SoftBank had “hit the bottom” and was making progress toward profitability.

Goto highlighted Arm, the chip designer that went public during the quarter, as the new driver of value for SoftBank. The company recorded a capital surplus of $4.65 billion from the proceeds of Arm’s listing. After adopting a defensive stance, SoftBank is now gearing up for a more active investment role, focusing on artificial intelligence (AI) for future growth.

SoftBank’s Vision Fund, its investment unit, reported a profit of 21.4 billion yen in the latest quarter, following a 160 billion yen profit three months earlier. The conglomerate stated that it had converted unsecured WeWork notes into shares and convertible bonds, resulting in a 21.6 billion yen loss from the transaction in the first half.

Despite previous write-downs on WeWork investments, SoftBank revealed that its commitment to provide credit support for WeWork increased the investment firm’s liabilities by 57.5 billion yen in the last quarter. The conglomerate remains selective in its investments, with a renewed focus on AI and future growth opportunities.