Internet Initiative Japan Inc. · TSE:3774

Internet Initiative Japan — Q1 FY2022 Earnings Presentation

32 slides from Internet Initiative Japan's earnings presentation, Aug 5, 2022

  1. Slide 1: Consolidated Financial Results for 1Q22

    Consolidated Financial Results for 1Q22 (April 1, 2022 to June 30, 2022) Internet Initiative Japan Inc. (IIJ) The Prime Market of the Tokyo Stock Exchange (Ticker symbol: 3774) August 5, 2022 Disclaimer Statements made in this presentation regarding IIJ’s or managements’ intentions, beliefs, expecta

  2. Slide 2: Outline

    Outline Ⅰ. Summary of 1Q22 P. 2 Ⅱ. Consolidated Financial Results for 1Q22 P. 3 – 16 Ⅲ. Service & Business Developments etc. P. 17 – 19 Appendix P. 20 – 30 • FY22(FY2022) means a fiscal year ending March 31, 2023. Others alike © Internet Initiative Japan Inc. 1

  3. Slide 3: Summary of 1Q22

    Unit: ¥ (JPY) billion (bn) Ⅰ. Summary of 1Q22 +/-. %, YoY = Year over year comparison Net Profit is “Profit for the period attributable to owners of the parent” FY22 started as planed from 1Q Strong demands for NW Services continued Revenues ¥58.19 bn +9.8% Operating Profit ¥5.03 bn +15.3% Acquired

  4. Slide 4: Consolidated Financial Results

    Ⅱ- 1. Consolidated Financial Results Unit: ¥ (JPY) billion YoY = Year over year comparison % of revenue % of revenue % of revenue % of revenue 1Q22 1Q21 FY2022 1H FY2022 Results Results YoY Targets YoY Targets YoY (Announced in May 2022) (Announced in May 2022) Apr. 2022 - June 2022 Apr. 2021 - June

  5. Slide 5: Year over Year Analysis

    Unit: ¥ (JPY) billion (bn) Ⅱ- 2. Year over Year Analysis GP = Gross Profit YoY = Year over year comparison Revenues 1Q21 1Q22 +5.22 52.97 58.19 • NW services (excl. Mobile) revenues are calculated by deducting the below mentioned Mobile services revenues from total NW services revenues. The revenues

  6. Slide 6: Revenues

    Ⅱ- 3. Revenues Unit: ¥ (JPY) million [ ] , YoY = Year over year comparison Internet Connectivity Services (Enterprise) Systems Integration (SI) Systems Construction (including equipment sales) Internet Connectivity Services (Consumer) Systems Operation and Maintenance Network (NW) Services Outsourci

  7. Slide 7: Cost of Revenues & Gross Profit Ratio

    Ⅱ- 4. Cost of Revenues & Gross Profit Ratio Unit: ¥ (JPY) million [ ] , YoY = Year over year comparison Cost of Revenues: NW (Network) Services SI (Systems Integration) ATM Operation Business Gross margin: NW (Network) Services SI (Systems Integration) Total 30.8% 26.5% 26.1% 27.7% 26.5% 24.4% 24.2%

  8. Slide 8: Network Services (1) Revenues

    Unit: ¥ (JPY) million Ⅱ- 5. Network Services (1) Revenues [ ] , YoY = Year over year comparison QoQ = Quarter over quarter comparison Total Contracted Bandwidth (Gbps) Internet Connectivity (enterprise) Services  1Q22: ¥9.52 billion, +1.1% YoY WAN Services Outsourcing Services • Of which, IP (dedi

  9. Slide 9: Network Services (2) Cost of Revenues

    Ⅱ- 5. Network Services (2) Cost of Revenues Unit: ¥ (JPY) million [ ] , YoY = Year over year comparison Circuit-related costs (Internet backbone, WAN lines etc.) Outsourcing-related costs (mobile infrastructure related costs such as interconnectivity charge and voice communication services, outsourc

  10. Slide 10: Systems Integration (SI) (1) Revenues

    Ⅱ- 6. Systems Integration (SI) (1) Revenues Unit: ¥ (JPY) million [ ] , YoY = Year over year comparison Systems Construction revenues (including equipment sales) Systems operation & maintenance revenues for on-premise system revenues Cloud revenues such as private Cloud which are recognized as syste

  11. Slide 11: Systems Integration (SI) (2) Cost of Revenues

    Ⅱ- 6. Systems Integration (SI) (2) Cost of Revenues Unit: ¥ (JPY) million [ ] , YoY = Year over year comparison Purchasing costs (Equipment etc.) Outsourcing-related costs (SI-related outsourcing personnel costs etc.) Others Network operation-related costs (Depreciation cost such as for cloud facili

  12. Slide 12: Human Capital Disclosure

    Ⅱ- 7. Human Capital Disclosure YoY = Year over year comparison Number of Employees Contract worker (personnel) Full-time worker (personnel) Jun. 2021 Sep. 2021 Dec. 2021 Mar. 2022 Jun. 2022 4,069 4,079 4,095 4,147 4,331 (+262 YoY) 296 262 270 270 306  FY22 plan for net addition of employees (consol

  13. Slide 13: SG&A

    Ⅱ- 8. SG&A Unit: ¥ (JPY) million [ ] , YoY = Year over year comparison Research & development expenses Commission expenses Others Personnel expenses ( ) % of total revenues FY21: 27,969 [+9.7%] 7,083 6,707 6,704 7,476 7,858 (13.4%) (12.0%) (11.9%) (12.3%) (13.5%) 125 127 125 1,035 124 130 1,012 1,49

  14. Slide 14: Profit

    Ⅱ- 9. Profit Unit: ¥ (JPY) million [ ] , YoY = Year over year comparison Operating margin  1Q22 Operating profit: ¥5.03 billion, +15.3% YoY Operating profit  1Q22 Profit before tax: ¥6.62 billion, +23.8% YoY Net profit • Interest expense: ¥133 million • Foreign exchange gain : ¥474 million 12.4% 1

  15. Slide 15: Consolidated Statements of Financial Position (Summary)

    Ⅱ- 10. Consolidated Statements of Financial Position (Summary) Unit: ¥ (JPY) millon Mar. 31, 2022 June 30, 2022 Changes Cash & cash equivalents 47,391 42,557 (4,834) Trade receivables 37,649 34,435 (3,214) Inventories 2,608 3,304 +696 Prepaid expenses (current & non-current) 24,006 27,468 +3,462 Tan

  16. Slide 16: Consolidated Cash Flows

    Ⅱ- 11. Consolidated Cash Flows Unit: ¥ (JPY) million YoY = Year over year comparison Operating Activities 1Q22 FY21: 43,573 Major YoY 1Q21 2Q21 3Q21 4Q21 1Q22 Breakdown Change 13,203 Profit before tax 6,623 +1,273 11,212 11,505 7,654 Depreciation and amortization 7,055 +449 4,855 Changes in operatin

  17. Slide 17: Other Financial Data

    Ⅱ- 12. Other Financial Data Unit: ¥ (JPY) million CAPEX CAPEX-related depreciation and amortization Cash CAPEX Finance lease FY21: 16,130 FY21: 15,090 4,698 4,593 3,745 3,682 3,753 4,009 3,796 3,280 3,645 3,094 2,285 3,251 1,414 1,113 2,440 2,331 1,981 2,308 1,447 840 1Q21 2Q21 3Q21 4Q21 1Q22 1Q21 2

  18. Slide 18: Service & Business Developments: Mobile & IoT

    Ⅲ- 1. Service & Business Developments: Mobile & IoT Unit: ¥ (JPY) billion (bn) %, YoY = Year over year comparison QoQ = Quarter over quarter comparison Mobile Subscription (Subs.)  Enterprise mobile (deducting MVNE from IIJ Mobile) 1,457  1Q22 revenue: ¥2.63 bn (+¥0.29 bn YoY) 1,374 • 1Q22 revenue

  19. Slide 19: Service & Business Developments: Multi-year-confirmed contracts

    Ⅲ- 2. Service & Business Developments: Multi-year-confirmed contracts related to network replacement etc.  Orders received around 4Q21 (excerpt from 4Q21 earnings’ presentation material)  Orders received around 1Q22 • Total contracted revenue: over ¥10 billion, 5 projects whose revenue volume rang

  20. Slide 20: Various in-house developed network services

    Ⅲ- 3. Various in-house developed network services Continuously expanding service line-ups & enhancing function to differentiate from competitors Secure Web Cloud Content Simple Secure MX IIJ ID Managed WAF DNS Platform Gateway Web Hosting Acceleration Backup Internet OCI Launched in June 2022 Unifie

  21. Slide 21: Financial Targets for FY22 (Unchanged from May 2022)

    Appendix Financial Targets for FY22 (Unchanged from May 2022) Unit: ¥ (JPY) billion (bn) YoY = Year over year comp % of Revenues % of Revenues % of Revenues FY22 Targets FY21 Results YoY FY22 1H Target YoY (Apr. 2022 - Mar. 2023) (Apr. 2021 - Mar. 2022) (Apr. 2022 - Sep. 2022) Revenues 250.0 226.3 +

  22. Slide 22: Financial Targets for FY22 (Unchanged from May 2022)

    Appendix Financial Targets for FY22 (Unchanged from May 2022) Unit: ¥ (JPY) billion (bn) YoY = Year over year comp Revenues FY21 +23.66 FY22 target 226.34 250.0 In addition to ongoing While enterprise mobile to largely demands for network Growth to accelerate with increase, total mobile revenue to i

  23. Slide 23: FY22 Dividend Forecast and Stock Split

    Appendix FY22 Dividend Forecast and Stock Split  Stock Split (Announced on August 5, 2022) Basic Dividend Policy  Stock split: 2-for-1 Basic dividend policy of IIJ is that IIJ pays dividends to its shareholders  Effective date: October 1, 2022 (record date: September 30, 2022) continuously and st

  24. Slide 24: Internet traffic continues to grow along with the advancement of IT usages

    Appendix Internet traffic continues to grow along with the advancement of IT usages Historical国内主要 IXトラフィック推移 traffic data of Major domestic IX IIJバックボーントラフィック推移 Historical traffic data of IIJ Backbone As of June 2022 Peak traffic (inward) As of June 2022 Peak traffic  1.1 times compared to Mar. 20

  25. Slide 25: DeCurret DCP Digital Currency Business

    Appendix DeCurret DCP (equity method investee) Digital Currency Business For more details https://www.decurret-dcp.com/en/news.html Digital Currency Forum Subcommittees (83 participants: companies, local governments, etc.) Promoting Proof of Concept (PoC) for DCJPY * (approx. 40 companies participat

  26. Slide 26: Initiatives to realize Carbon Neutral Data Centers

    Initiatives to realize Carbon Neutral Data Centers Information Disclosure based on the TCFD Recommendations Appendix https://www.iij.ad.jp/en/ir/integrated-report/tcfd/ About IIJ’s own data centers and their initiatives Matsue Data Center Park (Matsue DCP) Shiroi Data Center Campus (Shiroi DCC) Key

  27. Slide 27: IIJ Group's Client base: approx. 13,000 enterprises

    Appendix IIJ Group’s Client base: approx. 13,000 enterprises High penetration toward top 10 companies of each industry Client distribution per industry Client distribution per revenue volume Retail 5% Top 501- Construction/ 22% Communication, Real estate Top 401-500 IT 6% 4% 26% Top 1-100 48% Manufa

  28. Slide 28: Monthly Recurring Revenue Network services

    Appendix Revenue Recognition Category Unit: ¥ (JPY) billion Revenue category 1Q22 revenue About Business Situation & Outlook  Core service providing from the foundation  Matured market (hard to entry)  Highly reliable dedicated connectivity services for  Blue-chip client base IP 3.45 enterprise

  29. Slide 29: Capex and Business Developments

    Appendix Capex and Business Developments FY16 FY17 FY18 FY19 FY20 FY21 FY22 targets Revenues (¥ bn) 157.8 176.2 192.4 204.5 213.0 226.3 250.0 Stronger demands for 10.9% enterprise network services 10.4% Operating Profit 6.7% (JPY billion) 3.3% 3.8% 3.1% 4.0% Operating Margin 23.5 27.2 (%) 5.1 6.8 6.

  30. Slide 30: Docomo's Mobile data interconnectivity charge

    Appendix Docomo’s Mobile data interconnectivity charge (Mbps unit charge・monthly) Fiscal Year FY18 FY19 FY20 FY21 FY22 FY23 FY24 Method Actual cost method Future cost method MNOs are to disclose the charges for next three years based on their prediction about cost etc. Announced in Mar. 2022 ¥20,327

  31. Slide 31: Basic Monthly Charge

    Appendix Comparison between the old & new plans of consumer mobile Including tax Old New: GigaPlans (Apr. 2021~) New Price from April 1, 2022 2Giga Plan With voice ¥858 ¥850 With voice ¥1,760 Minimum Start Plan (2GB) Data-only ¥748 ¥740 (3GB) Data-only ¥990 With voice ¥1,078 ¥990 Basic Monthly Charg

  32. Slide 32: © Internet Initiative Japan Inc.

    © Internet Initiative Japan Inc.

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