Internet Initiative Japan Inc. · TSE:3774

Internet Initiative Japan — H1 2019 Earnings Presentation

21 slides from Internet Initiative Japan's earnings presentation, Nov 8, 2019

  1. Slide 1: Consolidated Financial Results for 1H FY2019

    Consolidated Financial Results for 1H FY2019 (First 6 months ended September 30, 2019) We changed our accounting principles from the Generally Accepted Accounting Principles in the U.S. (“U.S. GAAP”) to the International Financial Reporting Standards (IFRS) from the filing of FY2018 annual report “Y

  2. Slide 2: Agenda

    Agenda Ⅰ. Summary of 1H19 Financial Results Ⅱ. Consolidated Financial Results for 1H19 Ⅲ. Other Information © Internet Initiative Japan Inc. 1

  3. Slide 3: Summary of 1H19 Financial Results

    Ⅰ. Summary of 1H19 Financial Results Unit: JPY billion % ＝Year over Year (YoY) comparison Steady Strategy Execution of Providing Highly Reliable NW/SI-Cloud Services led to Revenue & Profit increase Exceeded 1H19 Targets, Revised FY19 Targets Upward (*1) (*) New FY19 1H19 Original FY19 2Q19 1H19 Res

  4. Slide 4: Consolidated Financial Results for 1H19

    Ⅱ- 1. Consolidated Financial Results for 1H19 Unit: JPY billion % of Revenues % of Adjusted Revenues [% of Revenues] % of Revenues % of Revenues Compared to 1H18 Adjusted 1H18 Adjusted Results(*1) FY19 Targets 1H19 Results Results 1H19 Targets [1H18 Results] [Compared to 1H18 Results] [New] Apr. 201

  5. Slide 5: Revenues

    Ⅱ- 2. Revenues Unit: JPY million [ ] , YoY = Year over year comparison NW Services Internet Connectivity Services (Enterprise) Systems Integration (SI) Systems Construction (including equipment sales) Internet Connectivity Services (Consumer) Systems Operation and Maintenance Outsourcing Service WAN

  6. Slide 6: Cost of Sales & Gross Profit Ratio

    Ⅱ- 3. Cost of Sales & Gross Profit Ratio Unit: JPY million [ ] , YoY = Year over year comparison Cost of Sales: NW Services SI ATM Operation Business Gross profit ratio: NW Services SI Total Gross Profit  Total  1H19: JPY15,200 million (+14.6% YoY from 1H18 adjusted results)  NW Services  1H19:

  7. Slide 7: Network Services (1) Revenues

    Unit: JPY million Ⅱ- 4. Network Services (1) Revenues [ ] , YoY =Year over year comparison QoQ = 2Q19 compared to 1Q19 WAN Services Total Mobile Revenue Internet Connectivity (Enterprise) Outsourcing Services Total Contracted Bandwidth (Gbps)  1H19: +13.3% YoY Internet Connectivity Services (consu

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

    Unit: JPY million Ⅱ- 4. Network Services (2) Cost of Sales [ ] , YoY =Year over year comparison QoQ = 2Q19 compared to 1Q19 Outsourcing-related costs Others  Circuit-related costs decreased QoQ along with Personnel-related costs WAN revenue QoQ decrease Network operation-related costs  Along with

  9. Slide 9: Systems Integration (SI) (1) Revenues

    Unit: JPY million Ⅱ- 5. Systems Integration (SI) (1) Revenues [ ] , YoY = Year over year comparison QoQ = 2Q19 compared to 1Q19 Systems construction revenues Systems operation & maintenance revenues Order backlog (sum of systems construction & equipment sales) (includes equipment sales) Cloud revenu

  10. Slide 10: Systems Integration (SI) (2) Cost of Sales

    Unit: JPY million Ⅱ- 5. Systems Integration (SI) (2) Cost of Sales [ ] , YoY =Year over year comparison QoQ = 2Q19 compared to 1Q19 Purchasing costs Outsourcing-related costs Others Network operation-related costs Personnel-related costs 1H18: 27,310 [+12.8%] 1H19: 31,742 FY18: 59,872 [+5.1%] [+16.2

  11. Slide 11: Number of Employees

    Ⅱ- 6. Number of Employees YoY = Year over year comparison Contract worker (personnel) Full time worker (personnel) 3,367 3,344 3,346 3,353 3,537 3,562 Employee Distribution 231 243 247 244 241 248 3,120 3,306 3,319 3,100 3,105 3,105  Hired 171 new graduates in Apr. 2019 (175 in Apr. 2018, 148 in Ap

  12. Slide 12: SG&A etc.

    Ⅱ- 7. SG&A etc. Unit: JPY million [ ] , YoY = Year over year comparison Research & development expenses Commission expenses Others Personnel expenses ( ) % of total revenues 1H18: 10,992 [+2.6%] 1H19: 11,901 FY18: 22,652 [+5.5%] [+8.3%] (12.3%） (11.8%） (11.6%） (11.5%） (12.1%） (11.9%）  1H19 personne

  13. Slide 13: Profit

    Ⅱ- 8. Profit Unit: JPY million Operating profit Net Profit (Profit for the period attributable to owners of the parent) Operating profit ratio 1H18: Operating profit: 2,300 [-0.7%] 1H19: Operating profit:  Profit before tax 3,352 [+45.7%]  1H19: JPY3,043 million 1H18: Net profit: 1,420 [-4.5%] (+2

  14. Slide 14: Operating Profit Comparison: 1H18 vs. 1H19

    Ⅱ- 9. Operating Profit Comparison: 1H18 vs. 1H19 Operating Profit Unit: JPY billion YoY = Year over year comparison YoY change in NW services gross profit YoY change in SI gross profit YoY change in ATM operation business gross profit YoY change in SG&A etc. 3.35 2.30  Gross profit increased almost

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

    Ⅱ- 10. Consolidated Statements of Financial Position (Summary) Unit: JPY million Mar. 31, 2019 Sep. 30, 2019 Changes Cash and cash equivalents 31,958 34,036 +2,079 Trade receivables 33,376 30,212 -3,164 Inventories 3,403 2,044 -1,360 Prepaid expenses (current and non-current) 16,560 18,530 +1,970 Ta

  16. Slide 16: Consolidated Cash Flows

    Ⅱ- 11. Consolidated Cash Flows Unit: JPY million YoY = Year over year comparison Operating Activities 1H18: 13,871 1H19: 13,394 Major YoY FY18: 25,152 Breakdown Change Profit before tax 3,043 -387 6,623 7,248 4,684 6,597 5,250 8,144 Depreciation and amortization 14,300 +6,887 (related to right-of us

  17. Slide 17: Other Financial Data

    Ⅱ- 12. Other Financial Data Unit: JPY million CAPEX CAPEX-related depreciation and amortization Cash CAPEX  FY19 total CAPEX plan: JPY18 billion Finance lease 1H18: 8,033 1H19: 7,994 1H18: 6,574 1H19: 7,197 FY18: 15,083 FY18: 13,867 Adjusted EBITDA 1H18: 8,873 1H19: 10,549 FY18: 19,890 • Total amou

  18. Slide 18: KPIs of Services

    Ⅲ - 1. KPIs of Services Revenue unit: JPY billion % = Year over year comparison Mobile revenue & subscription Security-related revenue  1H19-end total subscriptions:  SOC, DDoS Protection, Email/Web gateway, 2,821 thousand (+11.4%) virtual desktop services and others grew  1H19 total revenue:  S

  19. Slide 19: Financial Targets (revised on November 8)

    Ⅲ - 2. Financial Targets (revised on November 8) Unit: JPY billion YoY = Year over year comparison % of Revenues % of Revenues % of Revenues % of Revenues New FY19 Target FY18 Results YoY Old FY19 Targets 1H19 Results Apr. 2019 - Mar. 2020 Apr. 2018 - Mar. 2019 Apr. 2019 - Mar. 2020 Apr. 2018 - Sep.

  20. Slide 20: Operating Profit Comparison: FY18 vs. FY19 New Target

    Ⅲ - 3. Operating Profit Comparison: FY18 vs. FY19 New Target Operating Profit Unit: JPY billion YoY = Year over year comparison YoY change in NW services gross profit YoY change in SI gross profit YoY change in ATM operation business gross profit YoY change in SG&A expenses 7.6 6.0 • SG&A etc. shows

  21. Slide 21: Disclaimer

    Disclaimer 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 about its business and

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