Tokyo-based SoftBank Group has reported net profit for the April-June quarter fell 39% from a year earlier to 761.5bn yen ($6.9bn), due to smaller gains from the sales of its investments and a lack of blockbuster IPOs.

The result marked the Japanese investor’s first profit decline in five quarters and is a sign of the challenges in sustaining profits from its tech portfolio, which is heavily influenced by market conditions.

The investment giant reported a record 4.99tn yen in net profit for the fiscal year that ended in March, which included a large, one-time profit from the sale of T-Mobile shares in the first quarter.

Gains in other segments, including the Latin America Fund business, was not enough to make up for the absence of the sale.

Investment gains from SoftBank’s two Vision Funds fell 3% from the previous year. The U.S. initial public offering of Chinese ride-hailing company Didi Global on June 30 helped offset declines in the stock price of South Korea’s Coupang and other portfolio companies.

SoftBank also sold partial stakes in DoorDash, Uber, Guardant Health and Ke Holdings.

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But Didi’s shares have since tumbled 33%, after a crackdown by Chinese regulators over data security spooked investors.

High volatility in financial results

SoftBank’s investment approach means large transactions can cause unpredictable fluctuations in its results, said Mariko Semetko, senior credit officer at Moody’s Japan.

“Last year’s record high follows the previous year’s record loss and signifies the highly volatile nature of the company’s business,” she said.

“The company has a very fluid and complex capital structure, and unlisted investments and private financings that have limited transparency and are frequently collateralised. Its investment approach results in high governance risks.”

Additional regulatory measures have since cast broad uncertainty over listed Chinese companies and added pressure to SoftBank’s China portfolio.

Softbank shares in decline

Shares of U.S.-listed truck hailing company Full Truck Alliance, real estate site Ke Holdings and fintech company OneConnect Financial Technology all fell more than 30% since July.

Alibaba Group Holding, SoftBank’s most valuable asset, has declined 14%. SoftBank has already struck a series of deals to raise cash from investors using Alibaba shares as collateral.

It will settle the transactions by either handing over the shares or paying in cash.

SoftBank’s own shares have declined 13% since July, underperforming Japan’s Nikkei index as well as U.S. tech benchmark Nasdaq.

Pressure on SoftBank’s portfolio will raise speculation over whether Chairman and CEO Masayoshi Son will announce new measures to support its share price.

In March 2020, SoftBank said it would monetise 4.5tn yen in assets after a plunge in its stock price. It used a chunk of the proceeds to buy back its own shares, helping drive its share price to historical highs earlier this year.

Now some analysts are calling on SoftBank to launch additional buybacks.

“We believe buyback is the biggest driver of SoftBank stock price performance in near to medium term,” Jefferies analyst Atul Goyal wrote in a research report on Monday.