Internet Initiative Japan Inc. · TSE:3774

Internet Initiative Japan — Q1 2017 Earnings Presentation

21 slides from Internet Initiative Japan's earnings presentation, Aug 8, 2017

  1. Slide 1: Consolidated Financial Results for 1Q FY2017

    Consolidated Financial Results for 1Q FY2017 (First 3 months ended June 30, 2017) Internet Initiative Japan Inc. TSE1(3774), NASDAQ(IIJI) August 8, 2017 © 2017 Internet Initiative Japan Inc.

  2. Slide 2: Agenda

    Agenda Ⅰ. Summary of 1Q FY2017 Financial Results Ⅱ. Consolidated Financial Results for 1Q FY2017 Ⅲ. Reference Materials © 2017 Internet Initiative Japan Inc. 1

  3. Slide 3: Summary of 1Q FY2017 Financial Results

    Ⅰ. Summary of 1Q FY2017 Financial Results 1Q17 Results FY17 Targets 1H17 Targets Revenues JPY41.0 bn +13.2% JPY176.0 bn +11.5% JPY82.4 bn +11.2% Gross margin JPY6.5 bn +12.9% JPY28.2 bn +11.7% JPY12.6 bn +6.3% Operating income JPY1.1 bn +34.4% JPY6.5 bn +26.6% JPY2.0 bn +2.7% Net income* JPY0.7 bn +

  4. Slide 4: Consolidated Financial Results for 1Q FY2017

    Ⅱ- 1. Consolidated Financial Results for 1Q FY2017 Unit: JPY billion *Net income attributable to IIJ © 2017 Internet Initiative Japan Inc. 3

  5. Slide 5: Revenues

    Ⅱ- 2. Revenues Unit: JPY million NW Services Systems Integration (SI) [ ] , YoY = compared to the same period in a previous year Internet Connectivity Services (Enterprise) Systems Construction Internet Connectivity Services (Consumer) Systems Operation and Maintenance Outsourcing Service Equipment

  6. Slide 6: Cost of Revenues and Gross Margin Ratio

    Ⅱ- 3. Cost of Revenues and Gross Margin Ratio Cost of revenues: NW Services SI Equipment Sales ATM Operation Business Unit: JPY million [ ] , YoY = compared to the same period in a previous year Gross margin ratio: NW Services SI Overall Gross Margin  Total  1Q17: JPY6,530 million (up 12.9% YoY) •

  7. Slide 7: Network Services: Revenues

    Ⅱ- 4. Network Services (1)Revenues Unit: JPY million WAN Services [ ] , YoY = compared to the same period in a previous year Outsourcing Services QoQ = 1Q17 compared to 4Q16 Internet Connectivity Services (Consumer) Internet Connectivity Services (Enterprise) NW Services Revenues Total Contracted Ba

  8. Slide 8: Network Services: Cost of Revenues

    Ⅱ- 4. Network Services (2)Cost of Revenues Unit: JPY million Outsourcing-related costs [ ] , YoY = compared to the same period in a previous year Others QoQ = 1Q17 compared to 4Q16 Personnel-related costs Network operation-related costs Circuit-related costs Cost of NW Services  1Q17: up 16.8% YoY,

  9. Slide 9: Systems Integration (SI): Revenues

    Ⅱ- 5. Systems Integration (SI) (1)Revenues Systems Systems operation Cloud revenues within Order backlog (sum of systems construction and equipment sales) Unit: JPY million construction and maintenance systems operation and Order received (sum of systems construction and equipment sales) revenues re

  10. Slide 10: Systems Integration (SI): Cost of Revenues

    Ⅱ- 5. Systems Integration (SI) (2)Cost of Revenues Unit: JPY million Purchasing costs [ ] , YoY = compared to the same period in a previous year Outsourcing-related costs QoQ = 1Q17 compared to 4Q16 Others Network operation-related costs Personnel-related costs FY16: 50,992 [+10.3%] Cost of SI 11,09

  11. Slide 11: Number of Employees

    Ⅱ- 6. Number of Employees Unit: JPY million Contract worker [ ] , YoY = compared to the same period in a previous year Full time worker 3,110 3,124 3,108 3,104 3,234 Employee Distribution Administration 12% Sales 17% Engineers 71%  1Q17: up JPY333 million, up 6.1% YoY  Hired 148 new graduates in A

  12. Slide 12: SG&A Expenses/R&D

    Ⅱ- 7. SG&A Expenses/R&D Unit: JPY million Research & development expenses [ ] , YoY = compared to the same period in a previous year General & administrative expenses Sales & marketing expenses ( ) % of total revenues Sales & marketing expenses FY16: 20,113 (12.7%)  1Q17: up 13.8% YoY 4,946 4,955 4

  13. Slide 13: Operating Income and Net Income

    Ⅱ- 8. Operating Income and Net Income Unit: JPY million Operating Income Net Income Attributable to IIJ Operating Margin Ratio [ ] , YoY = compared to the same period in a previous year Income  Income before income tax expense: FY16 Operating income: 5,134  1Q17: JPY1,163 million (up JPY169 millio

  14. Slide 14: Consolidated Balance Sheets (Summary)

    Ⅱ- 9. Consolidated Balance Sheets (Summary) Unit: JPY million  Total IIJ Shareholders’ Equity to Total Assets: 48.6% as of Mar. 31, 2017, 49.4% as of Jun. 30, 2017 © 2017 Internet Initiative Japan Inc. 13

  15. Slide 15: Consolidated Cash Flows

    Ⅱ- 10. Consolidated Cash Flows Unit: JPY million [ ] , YoY = compared to the same period in a previous year Operating Activities FY16: 7,368 Major YoY Breakdown Change Net income 748 +177 Depreciation and amortization 2,979 +367 Fluctuations of operating assets and liabilities (690) +2,881 Investing

  16. Slide 16: Other Financial Data (CAPEX etc.)

    Ⅱ- 11. Other Financial Data (CAPEX etc.) Unit: JPY million CAPEX Depreciation and Amortization Cash CAPEX Capital Lease FY16: 16,531 FY16: 10,894 Adjusted EBITDA Adjusted EBITDA Annual Growth FY16: 16,109 © 2017 Internet Initiative Japan Inc. 15

  17. Slide 17: Cloud Business Developments

    Ⅲ - 1. Cloud Business Developments Cloud-related revenue Unit: JPY billion 1Q17 revenue Unit: JPY billion Cloud-related revenue YoY = compared to the same period in a previous year General purpose SaaS 0.09 Quarter-end month’s revenue Task-specific SaaS 0.48 FY16：15.66 FY17 target：18.0 Public 0.57 (

  18. Slide 18: Mobile and IoT Business Developments

    Ⅲ - 2. Mobile and IoT Business Developments Total subscription & revenue IIJmio Mobile (consumer) & IIJ Mobile (enterprise) Total subscription (thousand) Subscription (thousand): Total revenue (JPY billion) IIJmio Mobile IIJ Mobile ＜ ＞ MVNE Revenue (JPY billion): IIJmio Mobile IIJ Mobile FY16: 26.70

  19. Slide 19: Security Business Developments

    Ⅲ - 3. Security Business Developments Security-related Services Revenue JPY billion Security service line-ups YoY = compared to the same period in a previous year, QoQ = 1Q17 compared to 4Q16  Provide together with NW and SI as comprehensive Various security service line-ups 9.6 • Firewall • WAF 8.

  20. Slide 20: FY2017 Financial Target (Announced on May 15, 2017)

    Ⅲ - 4. FY2017 Financial Target (Announced on May 15, 2017) Unit: JPY billion NW services  Revenue growth to accelerate with large-scale Information Security Cloud project (MRC over JPY100 million), outsourcing and Internet connectivity services  FY17 mobile net addition target to be greater than F

  21. Slide 21: Forward-looking statements and Contact Information

    ※ Forward-looking statements Statements made in this presentation regarding IIJ’s or managements’ intentions, beliefs, expectations, or predictions for the future are forward-looking statements that are based on IIJ’s and managements’ current expectations, assumptions, estimates and projections abou

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