Internet Initiative Japan Inc. · TSE:3774

Internet Initiative Japan — Q3 FY2007 Earnings Presentation

19 slides from Internet Initiative Japan's earnings presentation, Feb 12, 2008

  1. Slide 1: 3rd Quarter of FY2007 Consolidated Financial Results

    Internet Initiative Japan Inc. 3rd Quarter of FY2007 Consolidated Financial Results President and CEO Koichi Suzuki CFO Akihisa Watai 2008.2.12

  2. Slide 2: 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 about

  3. Slide 3: 3Q07 Summary (3 months)

    3Q07 Summary (3 months) z Revenues and operating income continuously increased <3Q07 (2007/10-12)> - Total Revenues 18.4 billion ( 35.1 % YoY) - Operating Income 1.1 billion ( 15.2 % YoY) - Operating Margin Ratio 6.2 % (-1.1 points YoY) z Recurring revenues from connectivity and value-added services

  4. Slide 4: Consolidated Financial Results for 3Q07 (3 months)

    Consolidated Financial Results for 3Q07 (3 months) Unit: JPY billion % of Revenues % of Revenues 3Q07 3Q06 YoY (2007/10-12) (2006/10-12) Total Revenues 18.4 13.6 35.1% 80.9% 79.0% Total Costs 14.9 10.7 38.4% 19.1% 21.0% Gross Margin 3.5 2.9 22.7% 12.9% 13.8% SG&A/R&D 2.4 1.9 26.6% Operating 6.2% 7.3

  5. Slide 5: Revenues

    Revenues Internet Connectivity Services Unit: JPY million Systems Construction Recurring VAS and Others One-time Equipment Sales Up 35.1% YoY Revenues Revenues Up 12.7% QoQ Systems Operation and Maintenance 18,359 17,023 16,294 399 16,133 609 1,042 391 One-time 14,007 13,587 13,696 5,920 Revenues 12

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

    Cost of Revenues and Gross Margin Ratio Cost of Revenues Connectivity and VAS SI Equipment Sales Unit: JPY million （ hi-ho related costs ） Gross Margin Ratio Connectivity and VAS SI Gross Margin Ratio 25.7% 25.5% 25.0% 24.2% 24.1% 24.0% 23.5% 22.3% 21.3% 21.6% 20.1% 21.0% 21.0% 19.8% 20.1% 18.7% 19.

  7. Slide 7: Elements of Gross Margin Increase-Connectivity and VAS

    Elements of Gross Margin Increase-Connectivity and VAS Unit: JPY million Connectivity Cost Services for Related to Home Use hi-ho +2,331 +2,675 (+157.8%) Personnel Related Costs Circuit VAS Related and +216 Costs Others Leased +258 Supplies Commissions +1,746 +149 Others (+21.0%) +164 +47 Connectivi

  8. Slide 8: SG&A Expenses/R&D

    SG&A Expenses/R&D Unit: JPY million Sales and Marketing Expenses General and Administrative Expenses 2,372 2,221 2,30 2,301 1 (12.9%) (14.1%) Research and Development (13.0%) 2,062 2,062 63 60 ( ) % of Revenues 55 (15.1%) 1,874 1,794 1,744 1,747 (13.8%) 56 (11.1%) 1,549 1,527 (14.0%) (12.5%) 40 1,51

  9. Slide 9: Operating and Net Income

    Operating and Net Income Operating Income Net Income Operating Margin Ratio Unit: JPY million ‹Operating income: JPY 2,952 7.3% 6.9% million in 3Q07, up 25.3% YoY (9 6.7% 6.0% 6.2% months) 5.8% 5.8% 5.0% ¾ Operating income in 3Q07 increased 4.3% 4.5% by JPY 11 million QoQ (3 months) as 2,907 gross m

  10. Slide 10: Results by Service – Connectivity and VAS

    Results by Service – Connectivity and VAS Total Revenues from Connectivity and VAS Unit: JPY million Gross Margin Ratio Connectivity Services for Home Users Others Connectivity Services for Corporate Users VAS Total Contracted Bandwidth (Gbps) 330.3 334.9 346.0 323.5 253.2 260.0 225.4 185.5 194.9 14

  11. Slide 11: Results by Service - SI

    Results by Service - SI Revenue from SI Systems Construction Systems Operation and Maintenance Gross Margin Ratio 25.7% 25.0% 25.5% 24.2% 24.1% 24.0% Unit: JPY million 23.5% 22.3% 21.6% 21.3% JPY 20.1% 16,242 JPY 9,471 JPY Order 18,938 million backlog JPY 6,246 million million million 10,181 JPY (en

  12. Slide 12: Development for Mid/Long-term Growth

    Development for Mid/Long-term Growth IIJ Mobile IIJ Business IIJ Business - High-speed Mobile Internet Connectivity - Provide Content Delivery Platform for Service acTVila - Provides Mobile Network with IIJ’s high - IIJ’s high technology in contents delivery standard network solution for corporate a

  13. Slide 13: IIJ Mobile

    IIJ Mobile ■ Mobile Internet Connectivity for Corporate with MVNO Promote Cross-selling by Total Network Solutions Data Card - MVNO under NTT DoCoMo/EMOBILE - Provide mobile network connectivity for IIJ’s existing 6,500 customer base NTT-DOCOMO EMOBILE - High-speed connectivity for corporate custome

  14. Slide 14: Consolidated Balance Sheets

    Consolidated Balance Sheets Unit: JPY million December 31, March 31, Changes 2007 2007 Account receivable of JPY 3,045 million related to the Cash 9,214 13,555 (4,340) remarkably large-scale SI project Accounts Receivable 11,801 9,676 +2,125 Inventories 1,028 1,111 (84) Employee bonus payment and SI

  15. Slide 15: Consolidated Cash Flows

    Consolidated Cash Flows Unit: JPY million Net cash provided by (used in) operating activities 2,611 2,826 1,969 2,063 Net cash provided by operating activities: 1,608 1,444 1,027 951 905 JPY 455 million in 3Q07 (9months) 338 ¾Increase in operating income ¾Increase in accounts receivable related to S

  16. Slide 16: Other Financial Data (CAPEX etc.)

    Other Financial Data (CAPEX etc.) Unit: JPY million CAPEX 4,762 3,953 4,532 2,232 1,697 1,737 Adjusted EBITDA 1,250 1,224 1,242 1,058 6,620 7,728 6,434 795 842 636 2,316 2,379 533 2,091 2,137 2,044 1,880 1,751 1,739 1,666 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 1,517 1,261 Depreciatio

  17. Slide 17: Recent Press Releases

    Recent Press Releases Date Press Release 10/1 IIJ to Develop New SEIL/X Series 10/2 MF Launches "Multifeed JPNAP TokyoII Service" 10/10 IIJ Announces New Customer Campaign for IIJ URL Filtering Service 10/29 IIJ Acquires Exclusive License to Patented Information Security Technology 10/31 IIJ Acquire

  18. Slide 18: (Reference) Revenues from Connectivity and VAS

    (Reference) -Revenues from Connectivity and VAS- Unit: JPY million <Old Classification> Revenues from Connectivity and VAS Dial-up Access Service Others Dedicated Access Service VAS 16.8% 17.4% 17.5% 16.9% 16.3% 13.9% 14.6% 13.5% 13.8% 13.5% 13.0% 330.3 334.9 346.0 323.5 253.2 260.0 225.4 185.5 194.

  19. Slide 19: (Reference) Consolidated Financial Results for 3Q07 (9 months)

    (Reference) Consolidated Financial Results for 3Q07（9 months） Unit: JPY billion % of Revenues % of Revenues Target for 1Q07-3Q07 1Q06-3Q06 YoY FY2008 (2007/4-12) (2006/4-12) Year-end Total Revenues 48.3 40.0 20.8% 690 80.0% 80.7% Total Costs 38.7 32.3 19.7% ― 20.0% 19.3% Gross Margin 9.7 7.7 25.5% ―

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