Internet Initiative Japan Inc. · TSE:3774

Internet Initiative Japan — H1 FY2010 Earnings Presentation

22 slides from Internet Initiative Japan's earnings presentation, Nov 15, 2010

  1. Slide 1: 1st Half FY2010 Consolidated Financial Results

    1st Half FY2010 Consolidated Financial Results Internet Initiative Japan Inc. 2010.11.15

  2. Slide 2: Agenda

    Agenda Ⅰ. Summary of 1H FY2010 Financial Results Ⅱ. Consolidated Financial Results for 1H FY2010 Ⅲ. Reference Materials 1

  3. Slide 3: Summary of 1H FY2010 Financial Results

    I. Summary of 1H FY2010 Financial Results ≪1H FY2010 Financial Results ≫ <Original Target>  Revenue JPY34,272 million (up 6.2 % YoY) JPY32,300 million  Gross margin JPY6,842 million (up 9.7 % YoY)  Operating Income JPY1,201 million (up 3.0 % YoY) JPY1,200 million  Income before Income Tax Expens

  4. Slide 4: Consolidated Results for 2Q FY2010

    II-1. Consolidated Results for 2Q FY2010 Unit: JPY billion % of Revenues % of Revenues % of Revenues 1H10 1H09 YoY 1H10 Target （10/4～10/9） （09/4～09/9） （10/4～10/9） Total Revenues 34.3 32.3 6.2% 32.3 80.0% 80.7% Total Costs 27.4 26.0 5.4% ― 20.0% 19.3% Gross Margin 6.8 6.2 9.7% ― 16.5% 15.7% SG&A/R&D

  5. Slide 5: Revenues

    YoY = 2Q10 compared to 2Q09 II-2. Revenues QoQ = 2Q10 compared to 1Q10 Internet Connectivity Services Systems Construction Unit: JPY million One-time Recurring Outsourcing Services Revenues Equipment Sales Revenues WAN Services ATM Operation Business Systems Operation and Maintenance FY08: 69,731 FY

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

    II-3. Cost of Revenues and Gross Margin Ratio Cost of Revenues Network Services SI Equipment Sales ATM Operation Gross Margin Ratio Total Gross Margin Ratio Business Network Services SI 28.1% Unit: JPY million 26.7% 27.8% 26.2% 25.7% 24.6% 24.7% 23.3% 23.4% 21.6% 21.4% 21.1% 22.0% 20.7% 19.2% 19.7%

  7. Slide 7: Network Services (1) Revenues

    YoY = 2Q10 compared to 2Q09 II-4. Network Services (1) Revenues QoQ = 2Q10 compared to 1Q10 Internet Connectivity Services for Home Use Outsourcing Services Internet Connectivity Services for Corporate Use Total Contracted Bandwidth (Gbps) QoQ WAN Services +41.6Gpbs 702.5 647.2 650.4 660.9 Unit: JPY

  8. Slide 8: Network Services (2) Cost of Revenues

    YoY = 2Q10 compared to 2Q09 II-4. Network Services (2) Cost of Revenues QoQ = 2Q10 compared to 1Q10 Purchasing Costs Unit: JPY million Others Outsourcing Costs Personnel Related Costs Network Operation Related Costs 9,156 Circuit Related Costs 0 587 7,650 7,661 9 7,567 7 7,655 7,647 8 1,485 3 0 526

  9. Slide 9: Systems Integration (1) Revenues

    YoY = 2Q10 compared to 2Q09 II-5. Systems Integration (1) Revenues Unit: JPY million QoQ = 2Q10 compared to 1Q10 (Systems construction) Systems Construction Revenues 5,081 5,500 5,297 5,344 Systems Operation and Maintenance Revenues 4,428 4,580 4,236 Order Backlog System construction’s order 3,844 b

  10. Slide 10: Systems Integration (2) Cost of Revenues

    YoY = 2Q10 compared to 2Q09 II-5. Systems Integration (2) Cost of Revenues QoQ = 2Q10 compared to 1Q10 Purchasing Costs Unit: JPY million Outsourcing Costs 7,152 Others Network Operation Related Costs Personnel Related Costs 5,174 2,705 5,066 4,876 4,702 4,793 1,412 972 1,235 985 854 1,762 1,535 1,5

  11. Slide 11: Number of Employees

    YoY = 2Q10 compared to 2Q09 II-6. Number of Employees QoQ = 2Q10 compared to 1Q10 Contract worker Full time worker （number of employees） Including IIJ-GS ＋245 employees 1,968 2,000 1,687 1,740 267 [Employee Distribution] 1,602 265 263 1,500 1,373 229 Administration 173 16% 1,000 Sales 1,701 20% Engi

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

    YoY = 2Q10 compared to 2Q09 II-7. SG&A Expenses/R&D QoQ = 2Q10 compared to 1Q10 Sales and Marketing Expenses Research and Development Unit: JPY million General and Administrative Expenses ( ) % of Revenues FY08 : 10,668 FY09 : 10,544 2,978 2,931 2,881 IIJ-GS （1month） （15.7%） （14.9%） 2,759 （15.6%） 2,

  13. Slide 13: SG&A Expenses/R&D

    YoY = 2Q10 compared to 2Q09 II-7. SG&A Expenses/R&D QoQ = 2Q10 compared to 1Q10 Sales and Marketing Expenses Research and Development Unit: JPY million General and Administrative Expenses ( ) % of Revenues 2Q10 Operating Income: 7.1% Operating income related to IIJ-GS (1 month): JPY261 million 5.7

  14. Slide 14: Consolidated Balance Sheets

    II-9. Consolidated Balance Sheets Unit: JPY million September 30, March 31, Changes 2010 2009 Increased mainly due to IIJ-GS Cash and Cash Equivalents 9,408 8,764 +644 Nonmarketable Accounts Receivable 17,624 11,397 +6,227 equity securities: JPY1,796 million Available for sale Inventories 521 808

  15. Slide 15: Consolidated Cash Flows

    II-10. Consolidated Cash Flows Unit: JPY million Net cash provided by operating activities <2Q10> FY08 : 8,631 FY09 : 9,621 Increase in operating income Increase in accounts receivable: JPY2,522 3,280 3,360 million 2,628 2,835 2,018 1,987 2,164 2,274 Decrease in inventories, prepaid expenses 1,34

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

    II-11. Other Financial Data (CAPEX etc.) Unit: JPY million CAPEX (Include Capital Lease) FY08 : 7,006 FY09 : 5,584 2,685 1,831 1,832 1,752 1,804 1,489 Adjusted EBITDA 1,124 1,218 1,221 658 FY08 : 8,348 FY09 : 8,718 2,777 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 2,550 2,403 2,193 2,099 2,132

  17. Slide 17: Completed acquisition of the IIJ-GS (Sept. 1 2010)

    Ⅲ-1. Completed acquisition the of IIJ-GS（Sept.1 2010.） ＜Outline of acquisition＞  On Sept. 1 2010, IIJ completed the acquisition of IIJ-GS and made it its 100% owned subsidiary  Acquired mainly the domestic network outsourcing service business such as WAN services from AT&T Japan  Successfully com

  18. Slide 18: Providing new outsourcing service & solution

    Ⅲ-2. Providing new outsourcing service & solution ＜Cloud computing service＞ ＜Enhancing the outsourcing service ＞  Introduced to all different industries.  Introduced 18 new services & solution in 1H10  Customers highly value our long experience of  Especially devoting into cloud computing servic

  19. Slide 19: Reference: FY2010 Financial Target (Remain Unchanged)

    III-1. Reference: FY2010 Financial Target (Remain Unchanged) Unit: JPY billion (except for Net Income and Cash Dividend per Share) FY10 Initial Target Revised FY10 Target FY09 Actual YoY （10/4～11/3） （10/4～11/3） （09/4～10/3） (Revised FY10 to FY09 Acutal) Total Revenues 71.0 84.5 68.0 +16.5 24.3% Opera

  20. Slide 20: Reference: IIJ Group Companies

    III-2. Reference: IIJ Group Companies （As of Oct. 31, 2010) Company Name Ownership Main Business Provides a full range of network operation and management services, Net Care, Inc. from customer support, end-user help desks, monitoring and troubleshooting to integrated management services. Provides n

  21. Slide 21: Reference: Press Releases

    III-2. Reference: IIJ Group Companies Dat e Pr e ss Re le ase s 4/8 IIJ Obtains US and Japanese Patents for SMFv2 4/12 IIJ Introduces New Products to the IIJ SSL Certificate Management Service 5/12 IIJ and EC-One Form Alliance in Cloud Computing 5/31 IIJ Adds SSL Inspect Option on IIJ Secure Web Gat

  22. Slide 22: Forward-looking Statements / Contact Information

    ※ 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 abou

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