Internet Initiative Japan Inc. · TSE:3774

Internet Initiative Japan — Q3 FY2008 Earnings Presentation

27 slides from Internet Initiative Japan's earnings presentation, Feb 12, 2009

  1. Slide 1: 3rd Quarter FY2008 Consolidated Financial Results

    3rd Quarter FY2008 Consolidated Financial Results Internet Initiative Japan Inc. 2009.2.12 http://www.iij.ad.jp/en/IR/

  2. Slide 2: Agenda

    Agenda Ⅰ. Summary of FY2008/1Q-3Q (cumulative) Financial Results and Target for Full FY2008 Ⅱ. FY2008/1Q-3Q (cumulative) Financial Results Ⅲ. Reference Materials Copyright © 2008 Internet Initiative Japan Inc. 1

  3. Slide 3: Summary of FY2008/1Q-3Q Financial Results and Target for Full FY2008

    Ⅰ. Summary of FY2008/1Q-3Q (cumulative) Financial Results and Target for Full FY2008 FY2008/1Q-3Q (cumulative) Financial Results ¾Revenue JPY50,789 million (up 5.0% YoY) ¾Operating Income JPY1,844 million (down 37.5% YoY) z Revenue was up 5.0% YoY lead by the steady increase in recurring revenues wh

  4. Slide 4: Consolidated Financial Results for FY2008/1Q-3Q (cumulative)

    Ⅱ-1. Consolidated Financial Results for FY2008/1Q-3Q (cumulative) Unit:JPY billion % of Revenues % of Revenues 3Q08 3Q07 YoY （08/4～08/12） （07/4～07/12） ¾ recurring revenues (78.8% of total revenue) Total continuously increased by Revenues 50.8 48.3 5.0% 16.3% YoY 81.2% 80.0% ¾ cost from 4 new Total C

  5. Slide 5: Revenues

    Ⅱ-2. Revenues Unit: JPY million Internet Connectivity Services Systems Construction Recurring One-time Revenues Outsourcing Services Equipment Saleｓ Revenues Systems Operation and Maintenance ATM Operation Business 18,359 18,486 234 17,535 17,535 17,023 399 16,926 16,294 16,328 6 202 6 609 286 391 2

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

    Ⅱ-3. Cost of Revenues and Gross Margin Ratio Cost of Revenues Connectivity and Outsourcing Services SI Equipment Sales ATM Operation Gross Margin Ratio Total Gross Margin Ratio Business Connectivity and Outsourcing Services SI 28.8% Unit: JPY million 25.0% 25.5% 24.0% 24.6% 23.5% 23.3% 22.3% 21.6% 2

  7. Slide 7: Connectivity and Outsourcing Services

    Ⅱ-4. Connectivity and Outsourcing Services ① Revenues and Total Contracted Bandwidth Total Revenues from Connectivity and Outsourcing Services Connectivity Services for Home Use Connectivity Services for Corporate Use Outsourcing Services Total Contracted Bandwidth (Gbps) 476.6 449.1 422.1 392.4 323

  8. Slide 8: Connectivity and Outsourcing Services: Cost of Revenues

    Ⅱ-4. Connectivity and Outsourcing Services ② Cost of Revenues Unit: JPY million 7,510 new subsidiaries 7,065 7,276 45 6,598 6,738 29 47 hiho 8 1,126 7 1,133 1,131 5,670 18 Purchasing Costs 1,081 1,191 1 510 0 12 496 406 8 40 490 Others 22 452 429 893 959 446 899 901 824 Outsourcing Costs 786 875 863

  9. Slide 9: SI Revenues

    Ⅱ-5. SI ① Revenues (Systems Construction) 9,234 Unit: JPY million Systems Construction Revenues : 7,717 7,409 ･Down JPY2,196 million YoY (down 37.1%) 5,870 ･Up JPY470 million QoQ (up 14.4%) 5,500 ¾ Order received was especially affected by the 5,081 4,762 recent deterioration of economy. 4,236 4,177

  10. Slide 10: SI Cost of Revenues

    Ⅱ-5. SI ② Cost of Revenues Unit: JPY million 7,771 Purchasing Costs 6,154 6,3 6,326 5,938 6,024 Others 4,037 4,849 1,627 1,619 2,086 Network Operation 2 ,5 5 5 Related Costs 351 374 1 ,6 8 0 335 Outsourcing Costs 371 1,174 1,206 339 1,200 290 Personnel Related 1,103 1 ,0 2 2 1 ,0 8 5 Costs 2,175 2,2

  11. Slide 11: SG&A Expenses/R&D

    Ⅱ-6. SG&A Expenses/R&D Unit: JPY million Sales and Marketing Expenses General and Administrative Expenses Research and Development ( ) % of Revenues 2,614 2,550 2,526 （16.0%） 2,372 2,458 （15.1%） （14.4%） 2,221 2,30 2,301 1 （13.3%） 59 85 （14.1%） （12.9%） 61 73 （13.0%） 63 2,062 2,062 60 1,874 55 （15.1%）

  12. Slide 12: Number of Employees

    Ⅱ-7. Number of Employees ＜ Employee distribution＞ Number of Employees (total of full time and contract worker) Administration ：15.2% 1,800 Contract worker 1,586 Full time worker 1,513 1,559 1,500 198 212 1,373 178 Sales：18.5% 1,155 173 1,200 Engineers ：66.3% 987 129 900 127 1,335 1,361 1,374 600 1,2

  13. Slide 13: Operating and Net Income

    Ⅱ-8. Operating and Net Income Operating Income Net Income Operating Margin Ratio Unit: JPY million ‹Operating Income : 9.8% Down 26.2% YoY, Down 41.2% QoQ 7.3% 6.7% 6.9% ¾ Loss from 4 new subsidiaries were 5.8% 6.2% 5.0% JPY370 million. 4.5% 4.8% ¾ Operating margin ratio of current 2,907 3.5% 2.5% b

  14. Slide 14: Steady Growth of Recurring Revenues

    Ⅱ-9. Steady Growth of Recurring Revenues % of Revenues in FY2008/1Q-3Q (cumulative) YoY growth rate Overview ¾ Contracts of over Gbps steadily increased (up 21 contracts YoY). Total ＜For 9 months＞ Contracted bandwidth reached 476.6 Gbps. - Increased usage of the internet by corporate IT systems. Con

  15. Slide 15: Costs and Expenses Control

    Ⅱ-10. Costs and Expenses Control ＜Reduction Factors＞ ＜ 2H08 Prospect ＞ ¾ Network related costs of approximately JPY100 million ・ Re-planning the timing or the scale of backbone upgrade, etc. Connectivity & change from initial estimate: ¾ Personnel related cost and expenses Outsourcing of approximate

  16. Slide 16: Current Business' Profitability

    Ⅱ-11. Current Business’ Profitability Unit: JPY million Gross 17.5% 8,604 8,939 7,936 8,049 8,447 8,396 Margin 6,871 Ratio 16.9% 16.8% 16.0% 16.4% 16.5% 16.2% Connectivity and Revenues Outsourcing Services 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 Cost of Revenues 5,669 6,591 6,730 7,024 7,036 7,229 7,465

  17. Slide 17: 4 New Subsidiaries' Profitability

    Ⅱ-12. 4 New Subsidiaries’ Profitability Unit: JPY million 202 129 Cost of Revenues 60 11 25 0 7 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 165 175 111 SG&A 76 85 18 20 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 19 28 Operating loss 87 106 166 287 370 ‹ Divided our revenues, costs

  18. Slide 18: Revised Target for Full FY2008 Financial Results

    Ⅱ-13. Revised Target for Full FY2008 Financial Results (Previous Target) Reasons for Revision (New Target) ¾ Decrease in order backlog of JPY69.3 billion Revenues JPY73.0 billion systems construction affected by down JPY3.7 billion from the deterioration of the Japanese previous target economy in 3Q

  19. Slide 19: Mobile Solution development

    Ⅱ-14. Mobile Solution development ¾ IIJ will continue to enhance its mobile solution line-ups by introducing new solutions tied-up with functional data cards and thin clients, and by introducing mobile data communication service for home users to meet corporate customer’s demands. Proprietary Commun

  20. Slide 20: Consolidated Balance Sheets

    Ⅱ-11. Consolidated Balance Sheets Unit: JPY million December 31, March 31, Changes 2008 2008 Cash and Cash 8,955 11,471 (2,516) Equivalents Accounts Receivable 9,570 12,255 (2,685) Inventories 1,618 1,184 434 ¾ available-for-sale securities : JPY615 million Prepaid Expenses 2,434 2,005 429 ¾ nonmark

  21. Slide 21: Consolidated Cash Flows

    Ⅱ-12. Consolidated Cash Flows Unit: JPY million Net cash provided by (used in) operating activities Net Cash provided by operating activities (3Q08) : JPY1,346 million 4,083 2,826 ¾ Decrease in accounts receivable of JPY400 1,608 2,063 2,018 1,987 905 1,444 1,346 million 338 ¾ Decrease in accounts p

  22. Slide 22: Other Financial Data (CAPEX etc.)

    Ⅱ-13. Other Financial Data (CAPEX etc.) Unit: JPY million CAPEX (Include Capital Lease) 3,953 6,078 2,685 2,232 1,831 1,832 1,546 Adjusted EBITDA 1,250 1,224 1,242 1,058 9,534 9,534 842 7,728 3,101 636 2,316 2,379 2,137 2,193 2,044 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 1,880 1,948 1

  23. Slide 23: Reference: Consolidated Financial Results for 3Q08

    Ⅲ-1. Reference：Consolidated Financial Results for 3Q08 Unit:JPY billion % of Revenues % of Revenues 3Q08 3Q07 YoY （08/10～08/12） （07/10～07/12） Total Revenues 17.5 18.4 (4.5%) 80.8% 80.9% Total Costs 14.2 14.9 (4.6%) 19.2% 19.1% Gross Margin 3.4 3.5 (4.1%) 14.4% 12.9% SG&A/R&D 2.6 2.4 6.5% 4.8% 6.2% O

  24. Slide 24: Reference: Forecast for FY2008

    Ⅲ-2. Reference ： Forecast for FY2008 Unit: JPY billion (except for Net Income and Cash Dividend per Share) FY08 Target FY07 Actual YoY （08/4～09/3） （07/4～08/3） Total Revenues 69.3 66.8 2.5 3.7% Operating Income 2.8 4.8 (2.0) (41.2%) Income before Income Tax Expense (Benefit) 1.9 4.4 (2.5) (56.4%) Net

  25. Slide 25: Reference: IIJ Group Companies

    Ⅲ-3. 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

  26. Slide 26: Reference: Press Releases

    Ⅲ-4. Reference: Press Releases Date Press Releases 10/1 IIJ Introduces the IIJ Contents Delivery Service 10/7 IIJ to Establish Quarterly Publication on Latest Internet Technology and Security Issues 10/14 IIJ Partners with Alcatel-Lucent in Corporate Mobile Communications 10/20 IIJ to Provide Networ

  27. Slide 27: 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 abou

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