Internet Initiative Japan Inc. · TSE:3774

Internet Initiative Japan — FY2007 Earnings Presentation

24 slides from Internet Initiative Japan's earnings presentation, May 15, 2008

  1. Slide 1: Consolidated Financial Results for fiscal year ended March 31, 2008

    Internet Initiative Japan Inc. fiscal year ended March 31, 2008 Consolidated Financial Results May 15, 2008 http://www.iij.ad.jp/en/IR/

  2. Slide 2: Agenda

    Agenda . Summary of FY2007 Financial Results President and CEO Koichi Suzuki . Consolidated Financial Results for FY2007 CFO Akihisa Watai . Medium-term target and the forecast for FY2008 President and CEO Koichi Suzuki . Reference Materials © 1

  3. Slide 3: Summary of FY2007 Financial Results

    . Summary of FY2007 Financial Results z The continued trend in operating income growth, 4 consecutive years of increase in Revenues and operating income z Revise in FY2007 year-end dividend followed by the growth of operating income zYear end dividend from JPY750 to JPY1,000 (Annual dividend from JP

  4. Slide 4: Consolidated Financial Results for FY2007

    -1. Consolidated Financial Results for FY2007 Unit: JPY billion % of Revenues % of Revenues Connectivity and VAS and FY07 FY06 Systems Operation continuously YoY increased, up 17.1% YoY Weaker-than-expected revenues Total from Systems Construction in Revenues 66.8 57.1 17.1% 4Q07 affected by the una

  5. Slide 5: Revenues

    -2. Revenues Internet Connectivity Services Unit: JPY million One-time Systems Construction Recurring Revenues VAS and Others Revenues Equipment Sales Systems Operation and Maintenance 18,359 18,486 399 234 17,023 16,133 609 16,294 391 One-time 1,042 5,384 14,007 5,920 Revenues 13,587 13,696 630 393

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

    -3. Cost of Revenues and Gross Margin Ratio Cost of Revenues Connectivity and VAS SI Equipment Sales Unit: JPY million Gross Margin Ratio Connectivity and VAS SI Gross Margin Ratio 28.8% 25.7% 25.0% 25.5% 24.2% 24.1% 24.0% 23.5% 22.3% 21.3% 21.6% 20.1% 23.1% 21.0% 21.0% 19.8% 20.1% 18.7% 18.5% 19.1%

  7. Slide 7: Gross Margin Increase-Connectivity and VAS (YoY)

    -4. Gross Margin Increase-Connectivity and VAS (YoY) <Details of Cost> Unit: JPY million VAS Cost Personnel Others and Related to Related Costs 7% Others hi-ho 12% Circuit Related +2,579 +3,925 Costs Outsourcing 42% 23.1% Costs 18% Network Connectivity Operation Services for Related Costs Circuit Ho

  8. Slide 8: Gross Margin Increase-SI (YoY)

    -5. Gross Margin Increase-SI (YoY) Unit: JPY million <Details of Cost> Personnel Related Personnel Costs Related Costs Others 10% 6% +465 Systems Network Purchasing Operation and Network Operation Operation Costs Maintenance Related Costs Related Costs 44% 17% +1,142 +2,125 Outsourcing Costs 15.3% O

  9. Slide 9: SG&A Expenses/R&D

    -6. SG&A Expenses/R&D Unit: JPY million Sales and Marketing Expenses General and Administrative Expenses 2,458 1 2,372 Research and Development 2,30 2,301 13.3% ( ) % of Revenues 2,221 14.1% 12.9% 61 13.0% 2,062 2,062 60 63 1,874 55 15.1% 1,794 1,744 1,747 13.8% 56 11.1% 14.0% 12.5% 1,516 1,549 1,52

  10. Slide 10: Number of Employees

    -7. Number of Employees Number of Employees per Sector The number of employees increased by 218 in FY07 from FY06. Administration = (of the above, the number of new graduates were 83 13% IIJ will employ at the same level along with the growth. Sales = 18% Engineers =69% Copyright © 2008 Internet Ini

  11. Slide 11: Operating and Net Income

    -8. Operating and Net Income Operating Income Net Income Operating Margin Ratio ‹Operating income: Unit: JPY million Operating margin ratio in 4Q07 9.8% was 9.8%, up 3.6 points QoQ. 7.3% JPY4,759 million in FY07, up 6.7% 6.9% 5.8% 6.0% 5.8% 6.2% 36.0% YoY (Highest operating 4.5% 5.0% income in histo

  12. Slide 12: Results by Service – Connectivity and VAS

    -9. Results by Service – Connectivity and VAS Total Revenues from Connectivity and VAS Connectivity Services for Home Users Others Unit: JPY million Total Contracted Bandwidth (Gbps) Connectivity Services for Corporate Users VAS 392.4 323.5 330.3 334.9 346.0 253.2 260.0 225.4 1,099 185.5 194.9 1,033

  13. Slide 13: Results by Service - SI

    -10. Results by Service - SI Revenue from SI Unit: JPY million Systems Construction Systems Operation and Maintenance Gross Margin Ratio 28.8% 25.7% 25.0% 25.5% 24.2% 24.1% 24.0% 23.5% 22.3% Order backlog of SI 21.3% 21.6% 20.1% Total : 15,909 (up 68.0% YoY) Systems construction : 4,762 Order backlo

  14. Slide 14: Consolidated Balance Sheets

    -12. Consolidated Balance Sheets Unit: JPY million March 31, March 31, Changes 2008 2007 Used cash to acquire of Cash 11,471 13,555 2084 subsidiary shares etc. Accounts Receivable 12,255 9,676 +2,579 Increased along with Inventories 1,184 1,111 +73 business expansion Prepaid Expenses 2,005 1,053 +95

  15. Slide 15: Consolidated Cash Flows

    -13. Consolidated Cash Flows Unit: JPY million Net cash provided by (used in) operating activities 4,083 2,826 Net cash provided by operating activities: 2,611 1,969 2,063 JPY 4,538 million in FY07. 1,608 1,444 1,027 951 905 338 ¾Increase in accounts receivable along with the expansion of business ¾

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

    -14. Other Financial Data (CAPEX etc.) Unit: JPY million CAPEX 4,762 3,953 6,078 2,232 1,697 1,737 Adjusted EBITDA 1,546 1,250 1,224 1,242 1,058 6,620 7,728 9,53 9,534 795 842 636 3,101 533 2,316 2,379 2,091 2,044 2,137 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1,880 1,751 1,666 1,

  17. Slide 17: Medium-term target

    -1. Medium-term target Unit: JPY billion Over 100 Target 78.5 Forecast 66.8(Result) Expansion the Growth basis by Recurring Revenues Acceleration of the growth speed by Recurring Revenues Total Revenues; Ensuring the increase of Operating Expansion of SI business, Income basis strengthen over JPY 10

  18. Slide 18: Forecast for FY2008

    -2. Forecast for FY2008 Unit: JPY billion Recurring revenues continue to increase, Scale up of Systems construction. 34.5 78.5 668.4 11.7 17.5% Operating income continue to increase along with the recurring 1.9 5.2 47.6 0.4 9.3% revenues. Operating Costs include JPY0.9 billion loss for new subsidiar

  19. Slide 19: Reference: Consolidated Financial Results for 4Q07 (3 months)

    -1. Reference:Consolidated Financial Results for 4Q07 (3 months) Unit: JPY billion % of Revenues % of Revenues 4Q07 4Q06 YoY Total Revenues 18.5 17.0 8.6% 76.9% 80.2% Total Costs 14.2 13.7 4.1% 23.1% 19.8% Gross Margin 4.3 3.4 26.7% 13.3% 13.0% SG&A/R&D 2.5 2.2 10.6% 9.8% 6.7% Operating Income 1.8 1

  20. Slide 20: Reference: Revenues from Connectivity and VAS

    -2. Reference:Revenues from Connectivity and VAS Unit: JPY million <Old Classification> Revenues from Connectivity and VAS Dial-up Access Service Others Dedicated Access Service VAS 16.8% 17.4% 17.5% 16.9% 16.7% 16.3% 13.9% 14.6% 13.5% 13.8% 13.5% 13.0% 392.4 323.5 330.3 334.9 346.0 253.2 260.0 225.

  21. Slide 21: Reference: FY2007 Press Releases

    -3. Reference:FY2007 Press Releases Copyright © 2008 Internet Initiative Japan Inc. 20

  22. Slide 22: Reference: IIJ Group Companies

    -4. Reference: IIJ Group Companies Company Name Ownership Main Business Offers a comprehensive suite of systems integration services from design, IIJ Technology Inc. physical installation, operation, and maintenance to monitoring for our customers' diverse network systems. Provides full outsourcing

  23. Slide 23: Reference: Market Size of IT Outsourcing and Data Center in Japan

    Reference: Market Size of IT Outsourcing Services in Japan Up 28.6% FY2012 FY2007 JPY 3,596 billion JPY 2,795 billion Market Size of Data Center in Japan Up 40.8% FY2012 FY2007 JPY 1,634 billion JPY 1,161 billion Source MIC Research Institute Ltd. Copyright © 2008 Internet Initiative Japan Inc. 22

  24. Slide 24: Forward-looking Statements

    Forward-looking Statements Statements made in this presentation regarding IIJ’s or management’s 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 about

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