Internet Initiative Japan Inc. · TSE:3774

Internet Initiative Japan — FY2008 Earnings Presentation

27 slides from Internet Initiative Japan's earnings presentation, May 15, 2009

  1. Slide 1: Fiscal Year ended March 31, 2009 Consolidated Financial Results

    Fiscal Year ended March 31, 2009 Consolidated Financial Results Internet Initiative Japan Inc. 2009.5.15 http://www.iij.ad.jp/en/IR/

  2. Slide 2: Agenda

    Agenda Ⅰ. Summary of FY2008 Financial Results and Target for FY2009 Ⅱ. FY2008 Financial Results Ⅲ. Target for FY2009 Ⅳ. Reference Copyright © 2008 Internet Initiative Japan Inc. 1

  3. Slide 3: Summary of FY2008 Financial Results and Target for FY2009

    Ⅰ. Summary of FY2008 Financial Results and Target for FY2009 FY2008 Financial Results ¾Revenue JPY69,731 million (up 4.3% YoY) ¾Operating Income JPY2,917 million (down 38.7% YoY) z Recurring revenues steadily increased (up 14.3% YoY) as planed strengthening the basis of our business z One-time reven

  4. Slide 4: Consolidated Financial Results for FY2008

    Ⅱ-1. Consolidated Financial Results for FY2008 Unit:JPY billion % of Revenues % of Revenues ¾ recurring revenues (77.5% of FY08 FY07 total revenue) continuously YoY increased by 14.3% YoY （08/4～09/03） （07/4～08/03） Total Revenues 69.7 66.8 4.3% ¾ cost from 4 new subsidiaries of JPY593 million 80.5% 7

  5. Slide 5: Revenues

    Ⅱ-2. Revenues Internet Connectivity Services Systems Construction Unit: JPY million Recurring One-time Revenues Outsourcing Services Equipment Saleｓ Revenues Systems Operation and Maintenance ATM Operation Business 57,055 66,835 69,731 18,942 18,359 18,486 259 6 399 234 16,926 17,535 7,535 17,023 16

  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 25.5% 26.2% 25.0% 24.6% 24.0% 23.5% 23.3% 22.3% 2

  7. Slide 7: Connectivity and Outsourcing Services: Revenues and Bandwidth

    Ⅱ-4. Connectivity and Outsourcing Services (1) Revenues and Total Contracted Bandwidth Total Revenues from Connectivity and Outsourcing Services Unit: JPY million Connectivity Services for Home Use Connectivity Services for Corporate Use Outsourcing Services Total Contracted Bandwidth (Gbps) 530.5 4

  8. Slide 8: Connectivity and Outsourcing Services: Situation of the Services

    Ⅱ-4. Connectivity and Outsourcing Services (2) Situation of the Services ＜ Connectivity Services ＞ ¾ Corporate use ： z Total Contracted bandwidth reached 530.5 Gbps as a result of steady demands for network expansion for corporate customer and the shift to higher bandwidths, especially among content

  9. Slide 9: Connectivity and Outsourcing Services: Cost of Revenues

    Ⅱ-4. Connectivity and Outsourcing Services (3) Cost of Revenues Unit: JPY million FY07：26,040 FY08：29,317 7,510 7,466 7,065 47 7,276 45 7,034 42 6,598 6,738 10 29 new subsidiaries 8 1,126 1,140 7 1,131 1,250 1,133 18 5,670 1,191 1 9 hiho 1,081 510 507 0 51 12 496 406 8 40 485 490 22 452 429 893 959

  10. Slide 10: SI: Revenues

    Ⅱ-5. SI (1) Revenues (Systems Construction) 9,234 Unit: JPY million Systems Construction 7,409 7,717 Revenues : 5,870 5,500 ･FY08 : down 18.7% YoY 5,081 ・4Q08 : down 13.7% YoY, 4,177 4,236 up 24.7% QoQ 4,762 Order Backlog : 2,863 ･Down JPY1,899 million YoY (down 2,190 3,520 39.9%) 14,659 ･Down JPY65

  11. Slide 11: SI: Situation of SI and outsourcing personnel

    Ⅱ-5. SI (2) Situation of SI and outsourcing personnel Situation of SI ¾ Large systems construction projects, especially among manufacturing industry and temp industry were postponed or suspended affected by the sudden downturn of the Japanese economy in FY2007 ・A halt to large systems construction p

  12. Slide 12: SI: Cost of Revenues

    Ⅱ-5. SI (3) Cost of Revenues Unit: JPY million FY07：25,543 FY08：25,543 7,771 6,985 7,039 6,154 6,326 5,938 6,024 Purchasing Costs 4,037 2,566 2,970 1,627 Others 4,849 1,619 2,086 2,555 351 374 324 Network Operation 1,680 335 382 Related Costs 371 1,174 1,206 1,139 339 1,200 Outsourcing Costs 290 1,2

  13. Slide 13: 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 FY08 : 10,668 ( ) % of Revenues FY07 : 9,193 2,978 （15.7%） 2,614 2,458 （16.0%） 2,550 2,526 199 FY06 : 7,587 2,372 （13.3%） （15.1%） （14.4%） 2,30 2,301 1 59 2,221 （14.1%） （

  14. Slide 14: Number of Employees

    Ⅱ-7. Number of Employees ＜ Employee distribution＞ Number of Employees (total of full time and contract worker) 1,800 Administration Contract worker 1,586 1,602 1,600 1,559 14.3% Full time worker 1,513 1,373 198 212 229 1,400 178 Sales 173 18.6% Engineers 1,200 1,155 129 67.1% 987 1,000 127 800 1,335

  15. Slide 15: Operating and Net Income

    Ⅱ-8. Operating and Net Income Operating Income Net Income Operating Margin Ratio Unit: JPY million ‹Operating Income : Operating Income : 3,500 Operating Income : 4,759 Operating Income : 2,917 FY08 : down 38.7% YoY Net Income : 5,410 Net Income : 5,177 Net Income : 1,419 4Q08 : down 40.6% YoY, 9.8%

  16. Slide 16: Current Business' Profitability

    Ⅱ-9. Current Business’ Profitability (Divided our revenues, costs and expenses into our current business and 4 new subsidiaries) Unit: JPY million Gross 8,604 8,939 9,130 7,936 8,049 8,447 8,396 Margin 6,871 Ratio 18.7% 16.8% 16.5% Connectivity and Revenues 17.5% 16.4% 16.2% 16.0% 16.9% Outsourcing

  17. Slide 17: 4 New Subsidiaries' Profitability

    Ⅱ-10. 4 New Subsidiaries’ Profitability Unit: JPY million 202 202 129 Cost of Revenues 60 11 25 0 7 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 258 165 175 111 76 85 SG&A 18 20 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 19 28 Operating loss 87 106 166 287 370 449 ‹ O

  18. Slide 18: New Business Development and Mobile Solution

    Ⅱ-11. New Business Development and Mobile Solution Trust Networks Inc. IIJ Innovation Institute Inc. ¾Established on July 2007 (68.7% Consolidated subsidiary) ¾Operates 10 ATMs and its network placed in ¾Established on June 2008 (100% Consolidated subsidiary) ¾Currently developing a base technology

  19. Slide 19: Aggressively introduced new services and features in FY08

    Ⅱ-12. Aggressively introduced new services and features with our technological skills in FY08 Mobile Services Contents Delivery Services ●Added Fixed IP Address Feature to IIJ Mobile ●Added DRM function to the Flash Video Distribution Solution Access Service ●Developed Proprietary Video Distribution

  20. Slide 20: Consolidated Balance Sheets

    Ⅱ-13. Consolidated Balance Sheets Unit: JPY million March 31, March 31, Changes ¾ Decreased due to the 2009 2008 decrease in systems Cash and Cash Equivalents 10,188 11,471 (1,283) construction projects Accounts Receivable 10,257 12,255 (1,999) ¾ available-for-sale securities : JPY674 million Invent

  21. Slide 21: Consolidated Cash Flows

    Ⅱ-14. Consolidated Cash Flows Unit: JPY million Net cash provided by (used in) operating activities Net Cash provided by operating activities : FY08 JPY1,346 million, 4Q08 JPY3,280 million 4,083 2,826 3,280 ¾ Increase in accounts receivable of JPY709 1,608 2,063 2,018 1,987 1,444 1,346 million 905 3

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

    Ⅱ-15. Other Financial Data (CAPEX etc.) Unit: JPY million CAPEX (Include Capital Lease) 3,953 6,078 7,006 2,685 2,232 1,831 1,832 1,546 1,250 1,224 1,242 Adjusted EBITDA 1,058 842 636 658 7,728 9,534 9,534 8,348 8,348 3,101 2,550 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 2,316 2,37

  23. Slide 23: Forecast for FY2009

    Ⅲ. Forecast for FY2009 Unit: JPY billion (except for Net Income and Cash Dividend per Share) 1H09 Target FY09 Target FY07 Actual YoY （09/4～09/9） （09/4～10/3） （08/4～09/3） Total Revenues 33.5 73.0 69.7 3.3 4.7% Operating Income 0.8 3.3 2.9 +0.4 13.1% Income before Income Tax Expense (Benefit) 0.6 2.7 2

  24. Slide 24: Reference: Consolidated Financial Results for 4Q08

    Ⅳ-1. Reference：Consolidated Financial Results for 4Q08 Unit:JPY billion % of Revenues % of Revenues 4Q08 4Q07 YoY （09/01～09/03） （08/01～08/03） Total Revenues 18.9 18.5 2.5% 78.6% 76.9% Total Costs 14.9 14.2 4.7% 21.4% 23.1% Gross Margin 4.1 4.3 (5.0%) 15.7% 13.3% SG&A/R&D 2.6 2.5 21.2% 5.7% 9.8% Oper

  25. Slide 25: Reference: IIJ Group Companies

    Ⅳ-2. Reference: IIJ Group Companies Company Name Ownership Main Business Offers a comprehensive suite of systems integration services from IIJ Technology Inc. design, physical installation, operation, and maintenance to monitoring for our customers' diverse network systems. Provides full outsourcing

  26. Slide 26: Reference: Press Releases

    Ⅳ-3. Reference: Press Releases Date Press Releases 2009/1/7 Status of Repurchase of Own Shares of Internet Initiative Japan Inc. 1/27 IIJ Announces the Status of its Service and Network with Regards to IPv6 1/30 Results and Conclusion of Repurchase of Own Shares of Internet Initiative Japan Inc. IIJ

  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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