Good evening, everyone. Thank you so much for joining us today.

I would like to brief on our results, and we would like to take questions from you later on. First, there are four points as summary: revenue and profit increased, building strong momentum toward full-year forecasts.

At the beginning of fiscal year, the first quarter and the second quarter were expected to be under the target. However, as a result, first quarter, we landed both revenue and profit increase.

We are now in a position to be able to exceed our full-year forecast as well. The second is about cloud and AI.

This business drove revenue growth in enterprise, and enterprise operating income grew by 28%. The third, as CEO Miyakawa presented earlier, we actively executed strategic growth investments under the financial disciplines, and we would like to continue our strategic growth investment.

The fourth, for our first time, we issued euro-denominated senior unsecured notes to diversify our funding base. This slide shows the results for the first quarter of FY2026, building a strong momentum toward full-year forecast.

We have 27.5% of operating income increase. This is the changes in segment.

I would like to brief on this. As AI businesses started in the monetization phase, until FY2025, AI business was under other.

However, this has been under enterprise business from this fiscal year. I would like to go to the revenue, increased in all segments and hitting a record high.

Enterprise, distribution, financial, these three segments reached the double-digit revenue growth. Next, adjusted EBITDA increased in all segments, hitting a record high.

Next, operating income, steady progress toward full-year forecast in all segments. Last year, Media & EC segment experienced one-time factor, excluding this, we have 18.7% increase.

Media EC segment has ¥4 billion revenue with one-time factor. Excluding this, we have the operating income in Media & EC increased 18.7%.

This excludes one-time factors. Please refer to the right bottom of chart as the forecast by segment.

Next, net income. Net income increased due to increase in operating income, progressing steadily toward full-year forecast, ¥4.8 billion up at 3.3% increase.

Net income increased 6.6% excluding one-time factors. No major changes, but according to financial income and loss, there was the increase in interest expense and so on in SB.

As for the business, we would like to place an importance in increasing net income in all business segments. From here, I would like to explain the results by segment.

First, enterprise business. As I touched upon earlier, AI business is now under the enterprise business segment.

We changed subsegment. The right side is the present enterprise subsegment.

There are three subsegments. The revenue of enterprise segment: so, the revenue from AI computing infrastructure and related businesses drove growth in cloud and AI.

Cloud and AI revenue is expected to grow at CAGR of 30% in FY2026 to FY2027. At the time of announcing our mid-term business management plan, CAGR of 15% was announced.

However, right now we can see that we can exceed that target, now we expect to grow at CAGR of 30%. On top of cloud and AI, also security grew, and cloud services, also solutions.

As for telecommunications, increased in mobile revenue driven by subscriber growth. Segment income of enterprise segment: so, the segment income we would like to explain in details to make you understand better.

I would like to explain from the left side of this chart. Telecommunications and solutions, cloud and AI had a positive growth in revenue.

Telecommunications and solutions, cloud and AI were separated in these two. As for the cost of telecommunications has decreased slightly.

As for solutions and cloud and AI cost increased because of the increase in revenue and there are some impact in the cost of solutions, cloud and AI as well. Depreciation and disposals, this is mainly due to depreciation of AI infrastructure.

This was accounted in the other, and now it's under enterprise. Other expenses: the major one is that the increase due to personnel expenses.

Enterprise business segment is expanding now. Therefore, we are also enhancing the personnel as well.

Next, consumer segment. Revenue: both service revenue including mobile and sales of goods and others increased.

Looking at the graph from the top item: first, as for the sales of goods and others, the volume decreased, but revenue growth due to increase in unit price of mobile devices; electricity, revenue growth due to increase in trading transactions; the third one is the broadband, revenue growth mainly due to Open Fiber Japan Corp. commencing operations in June.

Open Fiber Japan Corp. is a joint venture between SoftBank Corp.

and Sony Network Communications Inc. This is under our consolidated and it will be accounted under our business segment.

The fourth one is the mobile, revenue increased by ¥3 billion driven by improvements in ARPU. Now, mobile revenue: so, we focus on increasing the revenue of mobile.

Here is the consumer segment income. Not only mobile revenue, but improvement gross profit from sales of goods were offset, and also some incentives and that amortization exists.

Therefore, due to the impact of that, as a total, it shows -¥0.9 billion. However, this has improved from what we had expected at the beginning of the fiscal year.

Right side shows some comments for each one. The gross margin from sales of goods and others is ¥5.5 billion increase.

Electricity, income increased due to improved procurement costs. Please also pay attention to the notes within the chart.

Sales commissions and sales promotion expenses, this increased mainly due to amortization of capitalized sales commissions and expenses for device purchase support program. A total, -¥0.9 billion.

This is the result of consumer segment. To here was about enterprise and consumer segment.

From here, using three slides, I would like to talk about KPI. First, ARPU.

ARPU increased by ¥60 driven by penetration of PayToku. This is as we expected at the beginning of the fiscal year.

We expect that will be increased by ¥200, full-year, it will be ¥160, which is the same line as the beginning of the fiscal year. Smartphone cumulative subscribers and net additions: smartphone cumulative subscribers declined year on year following a shift in acquisition strategy to focus on longer-term users.

Churn rate reduction and acquisition cost reductions are something that we want to do to make sure that we turn around smartphone subscriber numbers. Churn, as for the first quarter, due to impact of early churn, we saw a slight increase.

However, broadly flat. In fact, in June, we saw improvement compared to the same month last year, we are beginning to see the good trend.

For the second quarter and third quarter, we want to accelerate such improvement. About segment, Media EC: LY Line Yahoo announced financial results yesterday.

They are progressing well, and commerce media both saw a growth in revenue. Excluding one-time factors, profit increased due to growth of account advertising, led by media, steady growth toward full-year forecast.

Again, we are in good shape. Now, financial segment: PayPay announced earning result last week, and in financial segment, they are progressing well, and this segment saw huge growth thanks to PayPay's growth.

Distribution segment and other: distribution revenue and profit increased with steady growth in ICT products for enterprise customers. On the right-hand side, other segment: R&D and upfront investment expanded, but that includes something one-time.

Going forward, such one-time investment should not continue. In the meantime, we continue to invest in R&D so long as we believe that that should contribute to future business.

Whenever we saw an opportunity, we want to be open to investment. Next, investment and our financial position.

First, CapEx: telecommunications CapEx are progressing in line with full-year plan, which is at the bottom of the graph. IFRS 16 impact increased due to commencement of operations by Open Fiber Japan, which I touched upon earlier in consumer segment.

This joint venture leased dark fibers, and as a non-cash transaction, it was recorded, and it has IFRS 16 impact. For AI-related CapEx, in the first quarter, numbers were small, but for the full year, we want to execute as planned.

We are on track in terms of AI-related capital expenditures. Free cash flow: since we are actively invest strategically, we saw a negative cash flow compared to last year.

More in detail: operating cash flow, ¥65 billion decrease year on year due to impact from the working capital. Adjusted EBITDA is shown at the top of the graph, and EBITDA show steady growth.

Temporary working capital impact was reflected in operating cash flow, but again, it was one-time. Investment cash flow include investment in telecom equipment, which is in line with last year.

As Miyakawa-san mentioned earlier, in the first quarter, in order to launch neo cloud business, we invested in SB Energy of $1 billion, or about ¥160 billion. Then we establish SB Neo, and they have a new framework in place, we decided to sell the investment, and purchase price is $1.5 billion, the gain on sale should be expected in the next quarter.

Net interest-bearing debt: compared to same term last year, we saw increase by about ¥290 million, sorry, ¥0.2 billion. In June, there was a timing to pay dividend, at one time, net leverage ratio increased, but we do exit investment in SB Energy and we expect increasing free cash flow, this net leverage ratio should be improved going forward.

Topics of our financial activity or financing activity: we issued U.S. dollar-denominated notes in July 2025, and now we issued euro-denominated senior unsecured notes.

Coupon rate in Japanese yen after currency swap were equivalent to domestic notes. Going forward, we want to diversify financing instruments to support our business activities.

Again, we want to continue working to strengthen our financial position. This slide shows the balance sheet: total assets increased due to financial business expansion, and shareholders' equity increased year on year.

As of end of June last year, shareholders' equity ratio was 18% excluding financial businesses. Last but not the least, to summarize: we recorded growth both in revenue and profit, and our growth driver, cloud AI, delivered good results as expected, and enterprise increased in operating profit by 28%.

We executed strategic growth investment, and we issued euro-denominated foreign bond. That's all from myself, and we'd like to start taking questions if you have.

Thank you very much. We will now move on to the Q&A session.

I'm Tokunaga from Daiwa Securities. I have two questions.

One is about the progress of the first quarter. This quarter is very strong and you said it could be upward even other upward in the first half.

How much is that? How is the distribution?

Is it all segments or enterprise? What about LY contribution and so on?

Our view, actually, this is the same as what we disclosed at the beginning of the fiscal year, it'll be the improvement in the mid- hundreds of that's so tens of billion yen improvement. LY, PayPay already had earnings results presentations and they also announced positive results.

As for the consumer business, the second-hand handset sales was stronger than we had expected. The second-hand handset are mainly sold overseas.

Even though there was the impact by the war in Iran, considering such circumstance, we were able to sell well in terms of our second-hand device handset. Also, our efforts in the cost improvement and the cost reduction contributed to this positive results.

Looking at the segment, basically, all segment had better result than what we had expected in the beginning of the fiscal year.

Even though you said that second-hand handset sale did well, but do you think it's a temporary impact?

Regarding the second-hand handset sales, your understanding is correct, the price of handset will increase onwards, depending on how it goes, and we will also have to adjust ourselves how to deal with that, the price increase. Other factors, there is an one-time impact of the advanced investments in our R&D, which is about ¥10 billion or so.

Thank you. The second question is about the enterprise business.

I was looking at the data sheet, the page 5, shows cloud and AI is increasing in revenue. Depreciation, the first quarter decreased.

That's where you are. What about the margin, and is it going to go down?

Also, the depreciation is getting lighter because some investments that you made has almost ended? What about the next fiscal years and onwards?

Please make comments on margin.

As for cloud and AI, the revenue increase is due to the government-related project has started, so that's one factor. The profit margin of cloud and AI, as CEO Miyakawa explained earlier, minimum 30% or even more.

As for the finance perspective, we also have the same view: 30% or 40% margin is what we are targeting. Declining in depreciation

This is Sasaki. Compared to the previous fourth quarter and this first quarter, that you mentioned that depreciation got worse, but this is going to improve onwards.

Even without that, I think it would get better. While the government-led projects will be reflected in the second quarter onwards, in the first quarter, providing the revenue and income from the AI computing infrastructure is the major factor.

Thank you.

Kikuchi-san from SMBC Nikko Securities. I have two questions.

First, about sales and marketing expenses: at the previous earning announcement, increased amortization of customer acquisition cost you mentioned, and also purchasing of devices, I think each ¥20, ¥30 billion should be recorded in the first half of this year, I think you mentioned. You didn't clarify how much, but that level.

Was that changed since? Also, you talked about increased price of second-hand devices, which was around 16 or ¥15 billion or something.

In the first quarter, expected numbers were recorded, and the sales from second-hand devices offset, and what would happen in the second quarter? That's the first question.

Sales and marketing expenses or incentive, and Tokusuru Support, I think you are talking about that. Amortization of our sales incentive or marketing sales expenses, schedule-wise, we did execute amortization as scheduled, nothing was changed since the beginning of the year.

About expenses or costs for Tokusuru Support, that reflected the impact from the sales of second-hand devices. In the first quarter, better than what we expected at the beginning of the year.

Going forward, about amortization of sales incentives, as I mentioned earlier, we already had a schedule, no change is expected. For Tokusuru Support, we need to see how the global market goes in terms of second-hand device sales, and also competitive landscape is something that we need to keep watching on.

At the moment, we have not changed any expectation in the second quarter, but we will keep watching how it goes. About the second-hand devices and sales of second-hand devices, I'm not familiar with, for my understanding, I think if you have not sold devices as much as expected, maybe because of Forex impact, and also price of second-hand devices go up and as new devices price go up, if that's the case, the sales price of second-hand devices is something equivalent to new devices.

Of course, Forex should have impacts on the sales of second-hand devices, and how the market goes is something also we need to keep watching on. It's hard to predict how the market goes due to some geopolitical dynamics.

We expect improvement, but again, it's too early for us to be too optimistic. If I may clarify, in May, when we announced the previous quarter's earnings, the volume of sales was very small, but it's been improving.

Compared to last year, we see improvement in terms of volume of sales of second-hand devices.

The next question is SB Energy's gain on sales should be expected in the second quarter, is my understanding correct? You invested in the first quarter and you decided to sell SB Energy in July.

It's very short term of holding. Do you still expect gain on sales, and the gain will be booked on your balance sheet?

Gain on sale is expected, and we consider revising the forecast in the second quarter upwards, it's something to be considered. Whenever we have a gain on sales, it should be incorporated in our consolidated financial results.

Thank you.

Two questions. One is related to what Kikuchi-san asked earlier.

As of now, ¥160 billion or $1.5 billion is the purchase price. I believe there'll be some coordination onwards, but should we understand that there'll be a big upward?

How much impact this sell would be?

Initially, we invested $1 billion. Basically, it will be purchased by $1.5 billion, so that means that we will have the income of $0.5 billion.

This purchase price, we are still assessing and we are still under the process of assessing the purchase price to finalize. That would make a difference in terms of a capital gain.

The second question is about 180,000 decrease in subscribers. I believe that you had mentioned in the previous briefing that serial switchers measurement was a bit severe, and how's the impact after taking the measurement against the serial switchers?

How about the churn after you have taken the measurement against the serial switchers?

This net decrease in the subscribers will be improved. We don't say that there is zero impact, but basically, we were able to make our customers well understood of the price increase.

I could say that there is no major impact.

Thank you.

First, on the page 15, consumer expenses compared to the first quarter last year: for acquisition, 9 billion increase compared to last year; advertisement, 7.5 billion increase, total 15 billion. Cost of goods and gross margin of device sales grew.

You talked about amortization of sales incentives and the Tokusapo provisioning increase. Compared to last year, where are they included?

Compared to last year?

Compared to the first quarter last year, if I want to see which is up, which is down, amortization of Tokusapo or sales of second-hand devices and amortization of sales incentives, where were they and how much would it be?

This slide shows compared to the first quarter of last year, so that's exactly what you're talking about. Of sales-related expenses, -89 shown, mostly sales incentives or customer acquisition cost.

Tokusapo support is included in -69. I think over half of 69 is Tokusapo-related expenses.

Second-hand device prices were better, that's why the 69 was there. You thought it'd be bigger, but it ended at 69.

In the second quarter last year,

well sorry,

in the second quarter, compared to last year, should we expect more expenses? Fiscal sorry, net

second quarter, both should increase compared to the same term last year. Sales incentive, I think the same level as the first quarter, and Tokusapo, since one-time factor was last year, maybe the variance might be bigger than the variance in the first quarter.

When should we expect those will stop increasing?

For sales incentives, I think they should keep increasing compared to last year until the end of this fiscal year or maybe beyond that. Tokusapo thing should stop increasing by the end of this fiscal year.

In June and July, Y!mobile and SoftBank price increased. The impact was included in June as a first quarter.

How much impact should we expect in the second quarter impact from the price hike of SoftBank and Y!mobile?

For the new price plan, impact from the new price plan was not that big in the first quarter. In the second quarter and onwards, new price plans impact should be visible.

In terms of ARPU, we expect +¥200 in the second quarter onwards. Third quarter, fourth quarter, +¥200 should be expected, the ARPU-wise?

We changed the price plan including existing subscribers, ARPU would go up quickly and then flat. So, +¥200 in the third quarter and fourth quarter if you compare to the same term last year, yes.

On page 23, IFRS impact: so,

what's the size of Open Fiber Japan's business in terms of the customer numbers or areas?

Currently, our primary market is city centers. It depends on how long the lease term should be, and this term is relatively long, that's why the numbers on the balance sheet is rather big.

Did I answer to your question?

Commencement of Open Fiber Japan is an impact of IFRS 16 mainly because you make a long-term commitment because you want a long-term lease term. If it's a dark fiber, maybe 15 years of lease contract?

Yes, I think your assumption is fair.

My last question is AI data center, 140 MW of Sakai leased to [Neotra?] .

Should you expect income? You also mentioned that the 30% minimum margin.

Again, 140 MW Sakai, do you expect 30% profit margin?

Yes. We cannot disclose each and every transaction or customer, but we want to contribute to the projects overall.

We expect profit margin from cloud business. The selling of GPU computing, if that sales is 10 billion and the profit should be 100%, margin is 100%.

GPUs profit margin is higher, but the Sakai profit margin is lower, offset each other, you could still expect 30%-ish profit margin. Yes.

In general, profit margin from GPU delivery is much higher, whereas just the leasing data centers profit margin is lower.

About [Neotra?] in the States, why SoftBank KK has a majority stake?

In the States, SBG is bigger presence, why SoftBank has a majority of stake? What do you think about the presence in the United States?

We took a lead because we as an operating company want to launch a neo cloud business, that's why we have a majority stake. As we have been working on Beyond Japan initiative, and this was a great opportunity to go beyond Japan literally.

As you rightly mentioned, in the States, our presence is still small, we don't have expertise, we don't have much assets in the States yet. Then SoftBank Group has an assets which we can leverage.

We could again take advantage of SoftBank Group presence and especially assets to expand neo cloud business in the States.

That's all from myself. Thank you.

Thank you very much for your time. It's David Gibson from MST Financial.

I have two questions. The first one is, could you explain what sort of consumer buying data can be shared between the Seven & i Group, PayPay, and SoftBank as part of this new investment agreement and the collaboration agreement given the privacy laws in Japan?

The second question is regarding Kakaku.com and LY Corp. LINE synergies post-acquisition took longer and were less than planned.

Why will the acquisition of Kakaku.com by LY Corp., do you think, be more successful in this regard? Thank you.

The first question is about the investment in the Seven & i Holdings and its business overview. CEO Miyakawa explained in the larger presentation earlier, retail industry as a whole including Seven & i Holdings to enhance the AI transformation and digital transformation further in Japan.

We came to an agreement that we would like to also participate in that enhancement related to this transformation. Also for convenience stores, AX and DX are to enhance, then there will be some return to us in the future.

Therefore, we have decided to invest in Seven & i Holdings. Seven & i Holdings' customer points and our customer points, if we can integrate, then it should be a great contribution to our consumer business segment as well.

This is our expectation as well. The second question regarding the Kakaku.com acquired by LY, so that circumstance or the status is still ongoing situation, we are not in the position to make any comments.

I appreciate your understanding. Thank you.

I have two questions. First, about R&D expenses: Miyakawa-san mentioned he wanted to deploy team of Sarashina to [Neotra?]

. Once [Neotra?]

is up and running, R&D expenses should be smaller than before?

The team developing Sarashina and expertise developing Sarashina will be involved in [Neotra?] to work on physical AI.

That's actually one of the key of that initiative. On the other hand, Sarashina is our unique model, and we want to continue developing Sarashina further.

For that end, development cost of such effort should be reflected in other segment.

Thank you. The second question is about the dividend outlook.

You mentioned that you can expect gain on sales in the second quarter like ¥500 million, which should be one-time gain. If you can reach 600 billion of income in the quarter, how would it have an impact on dividend payout?

Dividend and dividend policy are something that we need to discuss further internally. Gain on sale, if or when it's expected, of course, this should have a contribution to the bottom line.

We have a lot of growth opportunities in general, and such gain on sale is a one-time. While we are looking at a financial discipline, we will make a final decision about the dividend.

Thank you very much.