Internet Initiative Japan Inc. · TSE:3774

Internet Initiative Japan — H1 2014 Earnings Presentation

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

  1. Slide 1: Consolidated Financial Results for 1H FY2014

    Consolidated Financial Results for 1H FY2014 (First 6 months ended September 30, 2014) Internet Initiative Japan Inc. TSE1(3774), NASDAQ(IIJI) November 7, 2014

  2. Slide 2: Agenda

    Agenda Ⅰ. Summary of 1H FY2014 Financial Results Ⅱ. Consolidated Financial Results for 1H FY2014 Ⅲ. Reference Materials 1

  3. Slide 3: Summary of 1H14 Financial Results

    Ⅰ. Summary of 1H14 Financial Results %: YoY change < 1H14 > < 2Q14 > Revenues JPY57.17 billion up 5.1% JPY29.62 billion up 6.0% Gross margin JPY10.90 billion up 4.5% JPY5.91 billion up 9.4% Operating income JPY2.42 billion down 19.7% JPY1.65 billion down 3.2% Business Developments:  Growing number

  4. Slide 4: Consolidated Financial Results for 1H FY2014

    Ⅱ- 1. Consolidated Financial Results for 1H FY2014 Unit: JPY billion % of Revenues % of Revenues % of Revenues % of Revenues % of Revenues YoY 1H14 Original FY14 Original FY14 Revised 1H14 1H13 Change in % Target Target Target (Apr. 2014 (Apr. 2013 (Apr. 2014 (Apr. 2014 (Apr. 2014 -Sep. 2014) -Sep.

  5. Slide 5: Revenues

    Ⅱ- 2. Revenues Network Services Equipment Sales Unit: JPY million Systems Integration (SI) Internet Connectivity Services (Enterprise) Systems Construction ATM Operation Business YoY = 1H14 compared to 1H13 Internet Connectivity Services (Consumer) Systems Operation and Maintenance Outsourcing Servi

  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 = 1H14 compared to 1H13 1H14 Gross Margin  Total Gross

  7. Slide 7: 1H Revenue and Operating Cost YoY Change

    Ⅱ- 4. 1H Revenue and Operating Cost YoY Change Revenue 1H13 1H14 Unit: JPY billion +2.77 54.40 57.17 <Breakdown of Major Difference> ATM operation business SI and Equipment sales Cloud +1.10 +2.28 Network Services System construction +0.72 Consumer services +0.65 System operation and +0.46 maintenan

  8. Slide 8: 2Q Revenue and Operating Cost YoY Change

    Ⅱ- 5. 2Q Revenue and Operating Cost YoY Change 2Q13 2Q14 Unit: JPY billion Revenue +1.66 27.96 29.62 <Breakdown of Major Difference> ATM operation business Cloud +0.56 SI and Equipment sales Network Services +1.37 System construction +0.60 Consumer services +0.34 System operation and +0.32 maintenan

  9. Slide 9: Network Services: Revenues

    Ⅱ- 6. Network Services (1)Revenues WAN Services Unit: JPY million Outsourcing Services Total Contracted YoY = 1H14 compared to 1H13 Internet Connectivity Services (Consumer) Bandwidth (Gbps) Internet Connectivity Services (Enterprise)  1H14 Internet Connectivity (Enterprise)  JPY8,208 million (dow

  10. Slide 10: Network Services: Cost of Revenues

    Ⅱ- 6. Network Services (2)Cost of Revenues Unit: JPY million YoY = 1H14 compared to 1H13 1H13: 26,464 (21.3%) 1H14: 26,369 (21.7%) FY13: 53,046 (21.2%) 13,242 13,223 13,299 13,282 13,213 13,155 (21.1%) (21.4%) (20.3%) (21.8%) (21.3%) (22.1%) Others Outsourcing Costs Personnel Related Costs Network O

  11. Slide 11: Systems Integration (SI): Revenues

    Ⅱ- 7. Systems Integration (SI) (1)Revenues < Systems Construction > Unit: JPY million Systems Construction Revenues Systems Operation and Maintenance Revenues Order Backlog ※Systems construction’s order 1H13: 7,151 1H14: 7,869 backlog and order received Order Received include equipment sales FY13: 1

  12. Slide 12: Systems Integration (SI): Cost of Revenues

    Ⅱ- 7. Systems Integration (SI) (2)Cost of Revenues Unit: JPY million YoY = 1H14 compared to 1H13 1H13: 15,765 (15.6%) 1H14: 17,940 (14.0%) QoQ = 2Q14 compared to 1Q14 FY13: 36,510 (14.0%) 7,350 8,416 9,061 11,684 8,322 9,618 (15.4%) (15.7%) (13.9%) (12.0%) (12.0%) (15.7％) Purchasing Costs Outsourcin

  13. Slide 13: Number of Employees

    Ⅱ- 8. Number of Employees Contract worker 2,269 2,311 2,322 2,353 2,523 2,546 Full time worker [Employee Distribution] Administration 13% Sales 19% Engineers 68% Personnel related 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 Unit: JPY million costs & expenses (% of revenue) 4,212 4,254 4,317 4,408 4,641 4,643 (15.

  14. Slide 14: SG&A Expenses/R&D

    Ⅱ- 9. SG&A Expenses/R&D Unit: JPY million 1H13: 7,421(13.6%) 1H14: 8,488(14.8%) FY13: 15,343(13.4%) YoY = 1H14 compared to 1H13 3,725 3,697 3,886 4,036 4,229 4,259 (14.1%) (13.2%) (13.7%) (12.8%) (15.4%) (14.4%) Research and Development Expenses General and Administrative Expenses Sales and Marketin

  15. Slide 15: Operating Income and Net Income

    Ⅱ- 10. Operating Income and Net Income Operating Income Net Income Attributable to IIJ Operating Margin Ratio Unit: JPY million YoY = 1H14 compared to 1H13  ATM Operation Segment Operating Income: Unit: JPY million 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 1H13 Operating income: 3,009 1H13 Operating 81 160 159

  16. Slide 16: Consolidated Balance Sheets (Summary)

    Ⅱ- 11. Consolidated Balance Sheets (Summary) Unit: JPY million Total IIJ Shareholders’ Equity to Total Assets: 57.7% as of March 2014 and 58.1% as of September 2014 15

  17. Slide 17: Consolidated Cash Flows

    Ⅱ- 12. Consolidated Cash Flows Operating Activities: Unit: JPY million YoY = 1H14 compared to 1H13 1H13: 3,696 1H14: 5,345 FY13: 8,787 1H14 Operating Activities YoY Change Breakdown Net income 1,486 (746) Depreciation and amortization 4,684 +445 Net gain on other non-cash 311 +537 Investing Activiti

  18. Slide 18: Other Financial Data (CAPEX etc.)

    Ⅱ- 13. Other Financial Data (CAPEX etc.) Unit: JPY million CAPEX (Include Capital Leases): Cash CAPEX Capital Lease 1H13: 4,647 1H14: 5,801 FY13: 12,560 Adjusted EBITDA: 1H13: 7,247 1H14: 7,100 FY13: 14,546 Depreciation and Amortization: 1H13: 4,238 1H14: 4,684 FY13: 8,823 17

  19. Slide 19: Reference Materials

    |... Internet. Initiative Japan Inc. < Reference Materials > © 2044 Internet Initiative Japan Inc.

  20. Slide 20: Cloud Business Developments

    Ⅲ-１. Cloud Business Developments Cloud-related revenue (Unit: JPY billion) Breakdown of 2Q14 revenue (Unit: JPY billion) Large SNS Game General purpose SaaS (groupware SaaS etc.) Other Users 0.08 Task-specific SaaS 2.29 2.42 2.48 2.64 2.84 2.97 (FX & POS) Approx. 17% of 0.28 2Q14 total Cloud- GIO/Ho

  21. Slide 21: MVNO Business Overview and for Consumers

    Ⅲ-2. MVNO Business Overview and for Consumers IIJ MVNO Total* Revenue and Subscription IIJmio/LTE service revenue and subscription *Total of consumer and enterprise MVNO business Total MVNO subscription: subscription Sep. 2014: 449,000 June 2014: 416,000 Mar. 2014: 384,000 Revenue 2Q14: 1.64 (JPY bi

  22. Slide 22: MVNO Business for Enterprises

    Ⅲ-3. MVNO Business for Enterprises Examples of Enterprise Mobile Usage IIJ mobile revenue and subscription Mobile access Tablet solution subscription • USB data communication • SIM card + tablet terminals + laptop PC • iPad for sales officers to replace • Offer with configuration features paper-base

  23. Slide 23: Revision of FY14 Full Year Financial Target

    Ⅲ-4. Revision of FY14 Full Year Financial Target FY14 Initial FY14 Revised Unit: JPY billion FY13 Actual FY14 Revised Target Target Target (Apr. 2013 compared to FY13 Actual (Apr. 2014 (Apr. 2014 -Mar.2014) -Mar.2015) -Mar.2015) Total Revenues 123.0 122.0 114.3 +7.7 +6.8% Operating Income 7.2 6.5 5.

  24. Slide 24: Forward-looking Statements; Contact Information

    ※ 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 abou

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