Internet Initiative Japan Inc. · TSE:3774

Internet Initiative Japan — H1 FY2017 Earnings Presentation

21 slides from Internet Initiative Japan's earnings presentation, Nov 7, 2017

  1. Slide 1: Consolidated Financial Results for 2Q FY2017

    Consolidated Financial Results for 2Q FY2017 (First 6 months ended September 30, 2017) Internet Initiative Japan Inc. TSE1(3774), NASDAQ(IIJI) November 7, 2017 © 2017 Internet Initiative Japan Inc.

  2. Slide 2: Agenda

    Agenda Ⅰ. Summary of 2Q FY2017 Financial Results Ⅱ. Consolidated Financial Results for 2Q FY2017 Ⅲ. Reference Materials © 2017 Internet Initiative Japan Inc. 1

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

    bn = billion %, YoY＝Year over Year change Ⅰ. Summary of 1H FY2017 Financial Results QoQ=Quarter over Quarter change *Net income attributable to IIJ 1H17 Results 1H17 Targets FY17 Targets Revenue JPY83.0 bn +12.0% JPY82.4 bn +11.2% JPY176.0 bn +11.5% Gross Margin JPY13.0 bn +9.9% JPY12.6 bn +6.3% JPY

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

    Ⅱ- 1. Consolidated Financial Results for 1H 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 QoQ = 2Q17 compared to 1Q17 Gross Margin  Total 1H17: JPY13,0

  7. Slide 7: Network Services: Revenues

    Ⅱ- 4. Network Services (1)Revenues WAN Services Unit: JPY million [ ] , YoY = compared to the same period in a previous year Outsourcing Services QoQ = 2Q17 compared to 1Q17 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 Personnel-related costs Network operation-related costs Circuit-related costs Cost of NW Services  1H17: up 17.2% YoY  Along with increases in WA

  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 = 2Q17 compared to 1Q17 Others Network operation-related costs Personnel-related costs 1H16: 22,993 [+13.0%] 1H17: 24,221 Cos

  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 Employee Distribution Administration Sales Engineers  2Q17: up JPY338 million, up 6.2% YoY  Hired 148 new graduates in Apr. 2017 (137 in Apr. 2016, 155 in Apr. 20

  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 1H16: 9,901[+8.3%] 1H17: 10,710 [+8.2%] Sales & marketing expenses FY16: 20,113 (1

  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: 1H16 Operating income: 1,948 1H17 Operating income:  1H17: JPY2,469 mi

  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, 49.0% as of Sep. 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 1H16: 4,073 1H17: 6,102 FY16: 7,368 Major YoY Breakdown Change Net income 1,577 +383 Depreciation and amortization 6,022 +738 Fluctuations of operating assets and liabilit

  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 1H16: 8,372 1H17: 9,346 1H16: 5,284 1H17: 6,022 FY16: 16,531 FY16: 10,894 Adjusted EBITDA Adjusted EBITDA Annual Growth 1H16: 7,231 1H17: 8,337 FY16: 16,109 © 2017 Internet Initiat

  17. Slide 17: Cloud Business Developments

    Ⅲ - 1. Cloud Business Developments Cloud-related revenue Unit: JPY billion 2Q17 revenue Unit: JPY billion Cloud-related revenue General purpose SaaS 0.09 Quarter-end month’s revenue Task-specific SaaS 0.44 1H16: 7.63 1H17: 8.62 Public 0.59 FY16: 15.66 Private 3.23 Cloud Customer Base MRC* over JPY0.

  18. Slide 18: Mobile and IoT Business Developments

    Ⅲ - 2. Mobile and IoT Business Developments YoY＝Year over Year change Total subscription & revenue IIJmio Mobile (consumer) & IIJ Mobile (enterprise) Total subscription (thousand) Subscription Total revenue (JPY billion) (thousand): IIJmio Mobile IIJ Mobile ＜ ＞ MVNE Revenue (JPY billion): IIJmio Mob

  19. Slide 19: Business Developments (1)

    Ⅲ - 3. Business Developments (1) YoY＝Year over Year change Further Accumulation of IoT Projects Security Revenue Increasing Largely  Security-related services revenue  IoT-related discussion & PoC prj. with our blue-chip customers as they seek business opportunities with IoT (+7.5%YoY) (+10.9%YoY)

  20. Slide 20: Business Developments (2)

    Ⅲ - 3. Business Developments (2) IIJ Omnibus Services Status Outlook for CDN Business  Cloud-type NW service offering necessary functions for JOCDN enterprise NW such as Internet connectivity, security & WAN by incorporating SDN/NFV technologies Video simultaneous distribution IIJ access platform I

  21. Slide 21: Forward-looking statements / 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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