Internet Initiative Japan Inc. · TSE:3774

Internet Initiative Japan — Q3 FY2013 Earnings Presentation

24 slides from Internet Initiative Japan's earnings presentation, Feb 7, 2014

  1. Slide 1: Consolidated Financial Results for 1Q-3Q FY2013

    Consolidated Financial Results for 1Q-3Q FY2013 (9 months ended December 31, 2013) Internet Initiative Japan Inc. TSE1(3774), NASDAQ(IIJI) February 7, 2014 0

  2. Slide 2: Agenda

    Agenda Ⅰ. Summary of 1Q-3Q FY2013 Financial Results Ⅱ. Consolidated Financial Results for 1Q-3Q FY2013 Ⅲ. Reference Materials 1

  3. Slide 3: Summary of 1Q-3Q FY2013 Financial Results

    Ⅰ. Summary of 1Q-3Q FY2013 Financial Results < 1Q-3Q FY2013 Financial Results > < Full Year Target> ・Revenues JPY82,746 million (up 7.9% YoY) JPY117-> 114 billion (up 7.3% YoY) ・Gross margin JPY15,518 million (down 0.0 % YoY) ・Operating income JPY4,211 million (down 16.5 % YoY) JPY9.4-> 6.0 billion

  4. Slide 4: Consolidated Financial Results for 1Q-3Q FY2013

    Ⅱ- 1. Consolidated Financial Results for 1Q-3Q FY2013 3

  5. Slide 5: Revenues

    Ⅱ- 2. Revenues Network Services Systems Integration (SI) 1Q-3Q FY13 Network services: JPY50,301 million Systems Construction (up 3.7% YoY) Internet Connectivity Services for Corporate Use 1Q-3Q FY13 Systems integration: JPY29,197 million Systems Operation and Maintenance Internet Connectivity Serv

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

    Ⅱ- 3. Cost of Revenues and Gross Margin Ratio Cost of revenues : Network Services Systems Integration（SI） Equipment Sales ATM Operation Business Gross margin ratio : Network Services Systems Integration（SI) Total Revenues Unit: JPY million YoY = 1Q-3Q FY13 compared to 1Q-3Q FY12 pt. = points 1Q-3Q

  7. Slide 7: 1Q-3Q Revenue YoY Change

    Ⅱ- 4. 1Q-3Q Revenue YoY Change ATM Operation Business Revenues Systems Construction & Equipment Sales Revenues Unit: JPY billion Systems Construction & Equipment Sales Order Received Systems Operation and Maintenance Revenues Network Services Revenues YoY = 1Q-3Q FY13 compared to 1Q-3Q FY12 +2.1 (+1

  8. Slide 8: 1Q-3Q Operating Cost YoY Change

    Ⅱ- 5. 1Q-3Q Operating Cost YoY Change SG&A Total Cost related to ATM Operation Business Unit: JPY billion Total Cost related to Systems Integration & Equipment Sales Total Cost related to Network Services <Breakdown of Major Difference> YoY = 1Q-3Q FY13 compared to 1Q-3Q FY12 Personnel-related costs

  9. Slide 9: Revenue (Compared with the Initial Target)

    Ⅱ- 6. Revenue (Compared with the Initial Target) ATM Operation Business Revenue Recurring Revenue (Network Services and Systems operation and Maintenance) Unit: JPY billion Systems Integration Revenue (including Equipment Sales Revenue) Network Services Revenue Initial Target YoY= Compared to the sa

  10. Slide 10: Operating Income (Compared with the Initial Target)

    Ⅱ- 7. Operating Income (Compared with the Initial Target) SG&A Systems Integration Gross Margin (including Equipment Sales Gross Margin) Unit: JPY billion Network Services Gross Margin ATM Operation Business Gross Margin Initial Plan YoY= Compared to the same time period in the previous year 3.4 Ope

  11. Slide 11: Network Services (1) Revenues

    Ⅱ- 8. Network Services (1)Revenues WAN Services Unit: JPY million Outsourcing Services Total Contracted Bandwidth (Gbps) YoY= 3Q13 compared to 3Q12 Internet Connectivity Services for Home Use QoQ=3Q13 compared to 2Q13 Internet Connectivity Services for Corporate Use  3Q13 Corporate Connectivity: up

  12. Slide 12: Network Services (2) Cost of Revenues

    Ⅱ- 8. Network Services (2)Cost of Revenues Unit: JPY million FY12: 50,692 1Q-3Q FY13: 39,764 (Gross margin ratio： 22.3%) (Gross margin ratio： 20.9%) 12,764 12,619 12,589 12,721 13,242 13,223 13,299 Others Outsourcing Costs Personnel Related Costs Network Operation Related Costs Circuit Related Costs

  13. Slide 13: Systems Integration (1) Revenues

    Ⅱ- 9. Systems Integration (SI) (1)Revenues <Systems Construction> Unit: JPY million Systems Construction Revenues Systems Operation and Maintenance Revenues Order Backlog ※Systems construction’s order backlog and order received Order Received include equipment sales YoY = 3Q13 compared to 3Q12 1Q-3Q

  14. Slide 14: Systems Integration (2) Cost of Revenues

    Ⅱ- 9. Systems Integration (SI) (2)Cost of Revenues 1Q-3Q FY12: 20,994 1Q-3Q FY13: 24,826 Unit: JPY million (Gross margin ratio： 18.0%) (Gross margin ratio： 15.0%) Purchasing Costs FY12: 30,425 (Gross margin ratio： 18.2%) Outsourcing Costs 6,564 7,526 6,904 9,431 7,350 8,416 9,061 Others Network Oper

  15. Slide 15: Number of Employees

    Ⅱ- 10. Number of Employees 2,078 2,081 2,086 2,116 2,269 2,311 2,322 Contract worker (+206 from 4Q12) Full time worker (No. of employees) [Employee Distribution] Administration 13% Sales 19% Engineers 68% 3,741 3,858 3,902 3,979 4,212 4,254 4,317 Personnel related costs and expenses (% of revenue) (

  16. Slide 16: SG&A Expenses/R&D

    Ⅱ- 11. SG&A Expenses/R&D 1Q-3Q FY12: 10,482 1Q-3Q FY13: 11,307 Unit: JPY million (13.7%) (13.7%) Research and Development Expenses FY12: 14,101(13.3%) General and Administrative Expenses 3,445 3,440 3,597 3,619 3,725 3,697 3,886 Sales and Marketing Expenses (13.9%) (13.1%) (14.1%) (12.2%) (14.1%) (1

  17. Slide 17: Operating Income and Net Income

    Ⅱ- 12. Operating Income and Net Income Operating Income Unit: JPY million Net Income Attributable to IIJ  ATM operation segment operating income: Operating Margin Ratio Unit: JPY million 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 16 67 81 75 81 160 159 FY12: 239 1Q-3Q FY13: 400  785 ATMs were placed as of

  18. Slide 18: Summary of Consolidated Balance Sheets

    Ⅱ- 13. Summary of Consolidated Balance Sheets 17

  19. Slide 19: Consolidated Cash Flows

    Ⅱ- 14. Consolidated Cash Flows Operating Activities: Unit: JPY million FY12: 9,639 1Q-3Q FY13: 5,732  1Q-3Q FY13 Operating Activities: Depreciation and amortization: JPY6,504 million Decrease in accounts receivable: JPY2,078 million Decrease in income taxes payable: (JPY1,493 million) Increase

  20. Slide 20: Other Financial Data (CAPEX etc.)

    Ⅱ- 15. Other Financial Data (CAPEX etc.) Unit: JPY million CAPEX (Include Capital Leases): Cash Payment Capital Lease Major Breakdown of 3Q13 CAPEX 1Q-3Q FY12: 8,452 1Q-3Q FY13: 9,863 FY12: 10,405 Cloud related JPY2.0 billion (Matsue Container DC) (JPY1.2 billion) Service development-related JPY0.7

  21. Slide 21: Developments of Cloud Business

    Ⅲ- 1. Developments of Cloud Business Cloud Revenue FY12 full yr Slightly behind FY13 Business Development Unit: JPY billion Unit: JPY billion JPY6.2 billion full yr plan of over JPY10 billion  Further adoption of cloud by business enterprises, 2.3 2.4 2.5 System volume increasing and seeing some mo

  22. Slide 22: Main Stream Adoption of Cloud Services

    Ⅲ- 2. Main Stream Adoption of Cloud Services Expansion of Client Base As of Dec. 2013 1,090 users As of Dec. 2012 900 users 210 As of Dec. 2011 600 users 180 MRC (Monthly Recurring Charge) 100 120 MRC over JPY0.5 million 90 50 MRC over JPY1 million Common Operation Platform Core Business System  Sh

  23. Slide 23: Overseas Business Development

    Ⅲ- 3. Overseas Business Development  Merged 2 subsidiaries to enhance the total IT solution combining network services & systems integration USA  Opened NY facility for US Cloud and expanded its service line-ups, Game customers slowing down  IIJ Europe increasing employees, strengthening the sale

  24. Slide 24: Forward Looking Statements

    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 about

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