Internet Initiative Japan Inc. · TSE:3774
Internet Initiative Japan — FY2023 Earnings Presentation
47 slides from Internet Initiative Japan's earnings presentation, May 10, 2024
Slide 1: Consolidated Financial Results for FY23 and New Mid-term Plan (FY24~FY26)
Presentation Material for Consolidated Financial Results for FY23 and New Mid-term Plan (FY24~FY26) Internet Initiative Japan Inc. (IIJ) The Prime Market of the Tokyo Stock Exchange (Ticker symbol: 3774) May 10, 2024 Disclaimer Statements made in this presentation regarding IIJ’s or managements’ int
Slide 2: Outline
Outline Ⅰ. FY23 Summary P. 2 Ⅱ. Result of the previous Mid-term Plan (FY21 ~ FY23) P. 3 Ⅲ. New Mid-term Plan (FY24 ~ FY26) P. 4 Ⅳ. Mid-to-long Term Vision P. 5 Ⅴ. FY23 Financial Results P. 6 ~ 19 Ⅵ. Service & Business Developments, etc. P. 20 ~ 25 Ⅶ. FY24 Financial Targets P. 26 Ⅷ. New Mid-term Plan
Slide 3: FY23 Summary
Ⅰ. FY23 Summary Unit; JPY/¥ billion (bn), +%, YoY = Year over year comparison, QoQ = Quarter over quarter comparison Net Profit is “Profit for the period attributable to owners of the parent” Expanded business domain to Service Integration in response to the advancement & renewal of enterprise NW Pi
Slide 4: Result of the Previous Mid-term Plan (FY21~FY23)
Ⅱ. Result of the Previous Mid-tern Plan (FY21~FY23) Consolidated base “times” are appropriate terms & were calculated by comparing FY23/FY23-end to FY20/FY20-end Subs. = subscription, m = million ICT usage & its advancement by Japanese enterprises finally kicked off, triggered by the Pandemic Realiz
Slide 5: New Mid-term Plan (FY24 ~ FY26)
Consolidated base Net Profit is “Profit for the period attributable to owners of the parent” Ⅲ. New Mid-term Plan (FY24 ~ FY26) “times” are calculated by comparing FY26/FY26-end to FY23/FY23-end The figures below are all assumed targets Accelerate business scale expansion toward the Mid-to-long Term
Slide 6: Mid-to-long Term Vision
Ⅳ. Mid-to-long Term Vision The figures mentioned below are all assumed status and image Beyond 5,000 Previous Mid-term New Mid-term Mid-to-long Term Vision *5,000 is derived from the Japanese unit of ¥5,000 oku (oku = one hundred million) which is ¥500 bn (FY21-FY23) (FY24-FY26) Total revenue around
Slide 7: Consolidated Financial Results
Ⅴ- 1. Consolidated Financial Results Unit: ¥ (JPY) billion YoY = Year over year comparison % of revenue % of revenue % of revenue FY23 Results FY22 Results YoY FY2023 Targets (Annunced in May 2023) Apr. 2023 - Mar. 2024 Apr. 2022 - Mar. 2023 Apr. 2023 - Mar. 2024 Revenues 276.08 252.71 +9.2% +23.37
Slide 8: Year over Year Analysis
Ⅴ- 2. Year over Year Analysis Unit: ¥ (JPY) billion (bn) GP = Gross Profit YoY = Year over year comparison Revenues FY21 +26.37 FY22 +23.37 FY23 226.34 252.71 276.08 SI (one-time revenue included) was weaker than expected due to longer Stronger than project period as project sizes Each service expec
Slide 9: Revenues
Ⅴ- 3. Revenues Unit: ¥ (JPY) million [ ], YoY = Year over year comparison Internet Connectivity Services (Enterprise) Systems Integration (SI) Systems Construction (including equipment sales) Internet Connectivity Services (Consumer) Systems Operation and Maintenance Network (NW) Services Outsourcin
Slide 10: Cost of Revenues & Gross Profit Ratio
Ⅴ- 4. Cost of Revenues & Gross Profit Ratio Unit: ¥ (JPY) million [ ] , YoY = Year over year comparison Gross margin: NW (Network) Services SI (Systems Integration) Total Cost of revenues: NW (Network) Services SI (Systems Integration) ATM Operation Business 29.1% 28.1% 28.5% 29.4% 28.9% 26.5% 26.4%
Slide 11: Network (NW) Services (1) Revenues
Ⅴ- 5. Network (NW) Services (1) Revenues Unit: ¥ (JPY) million [ ] , YoY = Year over year comparison QoQ = Quarter over quarter comparison Total Contracted Bandwidth (Gbps) WAN (Wide Area Network) Services Internet Connectivity (enterprise) Services Outsourcing Services FY23: ¥44.73 bn, +11.1% Yo
Slide 12: Network (NW) Services (2) Cost of Revenues
Ⅴ- 5. Network (NW) Services (2) Cost of Revenues Unit: ¥ (JPY) million [ ] , YoY = Year over year comparison Circuit-related costs (Internet backbone, WAN lines etc.) FY23 Circuit-related costs increased stably Outsourcing-related costs (mobile infrastructure related costs such as interconnectivit
Slide 13: Systems Integration (SI) (1) Revenues
Unit: ¥ (JPY) million Ⅴ- 6. Systems Integration (SI) (1) Revenues [ ] , YoY = Year over year comparison QoQ = Quarter over quarter comparison MRR = Monthly Recurring Revenue Systems Construction revenues (including equipment sales) Systems operation & maintenance revenues for on-premise system Cloud
Slide 14: Systems Integration (SI) (2) Cost of Revenues
Ⅴ- 6. Systems Integration (SI) (2) Cost of Revenues Unit: ¥ (JPY) million [ ] , YoY = Year over year comparison Purchasing costs (Equipment etc.) Outsourcing-related costs (SI-related outsourcing personnel costs etc.) Others Network operation-related costs (Depreciation cost such as for cloud facili
Slide 15: Human Capital Disclosure
Ⅴ- 7. Human Capital Disclosure Number of Employees (consolidated basis) Personnel-related costs & expenses (consolidated basis) Unit: ¥ (JPY) million Contract worker (personnel) Full-time worker (personnel) 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 Jun. 2022 Sep. 2022 Dec. 2022 Mar. 2023 Jun. 2023 Sep
Slide 16: SG&A, etc.
Ⅴ- 8. SG&A, etc. Unit: ¥ (JPY) million [ ] , YoY = Year over year comparison QoQ = Quarter over quarter comparison Research & development expenses Commission expenses Others (including other income and other expenses) Personnel-related expenses ( ) % of total revenues FY22: 30,687 [+9.3%] FY23： 34,8
Slide 17: Profit
Ⅴ- 9. Profit Unit: ¥ (JPY) million [ ] , YoY = Year over year comparison Operating margin Operating profit Operating profit FY23: ¥29.03 bn, +6.6% YoY Net profit Profit before tax 12.0% 12.5% 11.2% 11.7% FY23: ¥28.93 bn, +6.0% YoY 8.6% 9.6% 10.6% 8.1% • Foreign exchange gain: +¥533 million (
Slide 18: Consolidated Statements of Financial Position (Summary)
Ⅴ- 10. Consolidated Statements of Financial Position (Summary) Unit: ¥ (JPY) million Mar. 31, 2023 Mar. 31, 2024 Changes Mar. 31, 2023 Mar. 31, 2024 Changes Cash & cash equivalents 42,472 45,474 +3,002 Trade & other payables 22,313 25,435 +3,122 Trade receivables 41,340 45,683 +4,343 Borrowings (cur
Slide 19: Consolidated Cash Flows
Ⅴ- 11. Consolidated Cash Flows Unit: ¥ (JPY) million YoY = Year over year comparison Operating Activities FY23 Major FY22: 38,529 FY23： 40,780 Breakdown YoY Change 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 Profit before tax 28,934 +1,625 13,857 13,193 Depreciation and amortization 29,296 +495 11,215 1
Slide 20: Other Financial Data
Ⅴ- 12. Other Financial Data Unit: ¥ (JPY) million CAPEX CAPEX-related depreciation and amortization Cash CAPEX Finance lease FY22: 20,825 FY23： 22,521 FY22: 15,278 FY23：15,634 6,791 6,581 6,627 6,689 5,288 3,796 3,792 3,789 3,901 3,869 3,878 3,906 3,981 4,172 3,917 3,280 4,258 4,340 5,504 5,794 3,82
Slide 21: Timing of revenue recognition for large-scale complex flagship projects
Ⅵ- 1. Timing of revenue recognition for large-scale complex flagship projects Project size Order Timing of revenue Project overview Main revenue recognition (approx.) received recognition Foreign exchange trading platform for a prominent financial group ¥3.0 bn, 5 years SI O/M Dec. 2022 To be recogn
Slide 22: Mobile and IoT
Ⅵ- 2. Mobile and IoT Unit: ¥ (JPY) billion (bn) %, YoY = Year over year comparison QoQ = Quarter over quarter comparison Mobile Subscription (Subs.) Enterprise mobile (deducting MVNE from IIJ Mobile) FY23 revenue: ¥13.63 bn (+¥2.45 bn YoY) Subscriptions (Subs.) FY23-end subs.: 2,350 thousand (
Slide 23: NTT Docomo's Mobile data interconnectivity charge
Ⅵ- 3. NTT Docomo’s Mobile data interconnectivity charge (Mbps Unit charge, monthly) Fiscal Year FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 Method Actual cost method Future cost method: MNOs are to disclose the charges for next three years based on their prediction about cost etc. Announced in Mar.
Slide 24: Security Business
Ⅵ- 4. Security Business Unit: ¥ (JPY) billion ( ) = Year over year comparison MRR ＝Monthly Recurring Revenue Security service (MRR) largely grew along with continuous strong demands Mail Security Web GW Full outsource of mail system, Full outsource of web security, URL filtering, FY22: 26.74 (+2
Slide 25: Cloud Business
Ⅵ- 5. Cloud Business Unit: ¥ (JPY) billion ( ) = Year over year comparison MRR ＝Monthly Recurring Revenue Cloud service revenue (MRR) Majority of enterprise systems are still operating on-premise FY22: 32.43 (+13.2%) FY23: 33.36 (+2.9%) Location of servers working and/or deployed 1Q22 2Q22 3Q22
Slide 26: Initiatives to achieve sustainable corporate value expansion
Ⅵ- 6. Initiatives to achieve sustainable corporate value expansion Key KPIs IR engagement Business Evaluation by IRR Number of IR dialogues (Total number of IR meetings per year) Calculate WACC every FY and report it to the Board of PER PBR ROE FY20 FY21 FY22 FY23 Directors, and apply to the ent
Slide 27: FY24 Financial Targets
Ⅶ. FY24 Financial Targets Unit: ¥ (JPY) billion YoY = Year over year comparison Consolidated base % of total reveue % of total revenue Assumption First Half Targets YoY Full Year Targets YoY Revenue Gross Profit （Apr. 2024 to Sep. 2024) （Apr. 2024 to Mar. 2025) Total Revenue 142.0 ~ 143.0 +10.8% ~ +
Slide 28: New Mid-term Plan's Financial Outlook
Ⅷ. New Mid-term Plan’s Financial Outlook Unit: ¥ (JPY) billion Breakdown image of financial outlook Total FY20 FY23 FY26 outlook Gross FY20 FY23 FY26 outlook Operating FY20 FY23 FY26 outlook Revenue (one before (Previous Mid-term (New Mid-term’s Profit (one before (Previous Mid-term (New Mid-term’s
Slide 29: Acquired large-scale Service Integration projects
Appendix Acquired large-scale Service Integration projects Services provided by IIJ SI provided by IIJ Educational Information NW for Chiba city Integrated information system for public safety org. SASE案件(多数) Large-scale SASE project for a global company Internet IIJ GIO Managed Prisma Access UOM
Slide 30: Comparison between the old & new plans of consumer mobile
Appendix Comparison between the old & new plans of consumer mobile Including tax Old New: GigaPlans (Apr. 2021~) GigaPlans: by data plans As of Mar. 31, 2024 With voice ¥1,760 With voice ¥850 Minimum Start Plan 2Giga Plan 50GB (3GB) (2GB) 30GB less than 1% 40GB Data-only ¥990 Data-only ¥740 less tha
Slide 31: Business zone Financial
Appendix First in Japan to issue commercial digital currency (July 2024) About the Case About DeCurret Issuer of digital DeCurret HLD Shareholder: 35 companies including IIJ GMO Aozora Net Bank, Ltd. currency Shareholder: DeCurret HLD 100% • Digitalization of environmental value transaction (non-fos
Slide 32: Data center (DC)
Appendix Data center (DC) Matsue DCP (opened in Apr. 2011) Shiroi DCC (opened in May 2019) Operate 16 DCs in Japan, 2 of which are owned by IIJ (as of Mar. 2024) Objective Own service facility Expanding own DC capacity along with growing demands for IIJ services • First in Japan to use outside-a
Slide 33: Presentation material for company overview
【Reference】 Presentation material for company overview P. 32 ~ 45 © Internet Initiative Japan Inc. 32
Slide 34: Company Profile
Business Company Profile About IIJ Model Growth Strength Strategy IIJ has been taking initiatives in Internet Infrastructure field in Japan Established December 1992 (The first established full-scale ISP in Japan) Number of Employees 4,803 (approx. 70% engineers) Large Shareholders NTT Group, KDDI,
Slide 35: From ISP to Total Network Solution Provider
Business About IIJ From ISP to Total Network Solution Provider Model Growth Strength Strategy Systems Integration (SI) revenue: Systems construction One time revenue (including equipment sales) EMERGE Systems operation and maintenance Network enhancement, (including private Cloud) Cloud, consumer mo
Slide 36: IIJ as a Total Network Solution Provider
Business About IIJ IIJ as a Total Network Solution Provider Model Growth Strength Strategy Offers various network services and systems integration together in many projects 15,000 customers Approx. (as of Mar. 31, 2024) (Japanese companies, central government agencies, local governments, consumer IS
Slide 37: Extensive Service Lineups
Business About IIJ Extensive Service Lineups Model Growth Unit: ¥ (JPY) billion (bn) Strength Strategy FY23 Revenue category About Business Situation & Outlook revenue Core service providing from the foundation Matured market (hard to entry) Highly reliable dedicated connectivity services for
Slide 38: Management Structure (planned from June 2024)
Business About IIJ Management Structure (planned from June 2024) Strength Model Growth Strategy Outside independent directors: 5 directors, 42% of the total directors Female officers: 3 officers, 19% of the entire Board (including Company Auditors) Koichi Suzuki Satoshi Murabayashi Founder of
Slide 39: Monthly Recurring Revenue Accumulation
Business About IIJ Monthly Recurring Revenue Accumulation Model Unit: ¥ (JPY) billion (bn) Growth % = Year over year change Strength Strategy FY18 FY19 FY20 FY21 FY22 FY23 Revenues 192.4 204.5 213.0 226.3 252.7 276.1 ATM operation business (+9.2%) (+6.3%) (+4.2%) (+6.3%) (+11.7%) (+9.2%) Systems con
Slide 40: Capex and Business Developments
Business About IIJ Capex and Business Developments Model Unit: ¥ (JPY) billion (bn) Growth Strength Strategy FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 Revenues 157.8 176.2 192.4 204.5 213.0 226.3 252.7 276.1 Stronger demands for enterprise network services Operating 6.7% 10.4% 10.8% 10.5% margin 3.3%
Slide 41: Service & Solution Development Capability
Business About IIJ Service & Solution Development Capability Model Growth Strength Strategy Initiate the market by continuously developing innovative various network-related services & solution in-house © Internet Initiative Japan Inc. 40
Slide 42: Excellent Customer Base
Business About IIJ Excellent Customer Base (Number of IIJ Group’s clients: approx. 15,000 as of March 31, 2024) Model Growth Strength Strategy Through reliable operation, continuous use of Internet connectivity services since the inception of IIJ Our reliable infrastructure operation and cross-s
Slide 43: Competitive Advantages
Business About IIJ Competitive Advantages Model Growth Strength Strategy Against telecom carriers, IIJ Against systems integrators (SIers), IIJ • Has highly skilled IP (Internet Protocol) engineers • Operates one of the largest Internet backbone (SIers do not) • Is faster to move than bureaucratic o
Slide 44: NW Services and SI provided together as a Total Solution
Business About IIJ NW Services and SI provided together as a Total Solution Strength Model Growth Strategy Systems Integration (SI) to meet specific requirements cannot be covered by NW services Network (NW) services (in-house developed) Secure Web Managed Cloud Content Simple Secure MX IIJ ID DNS P
Slide 45: Drastically Changing Enterprises Circumstance
Business About IIJ Drastically Changing Enterprises Circumstance Model Growth Strength Strategy Labor shortage require 30 years ago Nowadays more IT Japan needs more High Speed/Capacity competitiveness by IT Network Network System CPU/Storage Performance Improve Network convergence System Every CEO
Slide 46: Market Growth Forecast, etc.
Business About IIJ Market Growth Forecast, etc. Model Growth Strength Strategy Historical traffic data of major domestic IX Operation where IT department spends the most time Top 7 items are shown below Peak traffic Study about replacing of the current systems 72 Responding to in‐house inquries 54 S
Slide 47: © Internet Initiative Japan Inc.
© Internet Initiative Japan Inc.
Internet Initiative Japan — FY2023 Earnings Presentation on 6ix