Internet Initiative Japan Inc. · TSE:3774

Internet Initiative Japan — H1 FY2013 Earnings Presentation

22 slides from Internet Initiative Japan's earnings presentation, Nov 8, 2013

  1. Slide 1: Consolidated Financial Results for 1st Half FY2013

    Consolidated Financial Results for 1st Half FY2013 (First 6 months ended September 30, 2013) Internet Initiative Japan Inc. TSE1(3774), NASDAQ(IIJI) November 8, 2013

  2. Slide 2: Agenda

    Agenda Ⅰ. Summary of 1H FY2013 Financial Results Ⅱ. Consolidated Financial Results for 1H FY2013 Ⅲ. Reference Materials 1

  3. Slide 3: Summary of 1H FY2013 Financial Results

    Ⅰ. Summary of 1H FY2013 Financial Results < 1H FY2013 Financial Results > ・Revenues JPY54,397 million (up 6.4% YoY) ・Gross margin JPY10,430 million (up 2.8% YoY) ・Operating income JPY3,009 million (down 7.8% YoY) ・Income before income tax expense JPY3,348 million (up 5.4% YoY) ・Net income attributab

  4. Slide 4: Consolidated Financial Results for 1H FY2013

    Ⅱ- 1. Consolidated Financial Results for 1H FY2013 (Unit: JPY billion) % of Revenues % of Revenues % of Revenues YoY 1H13 Target Actual against 1H13 1H12 (Change in %) Target in % （13/4～13/9） （12/4～12/9） （13/4～13/9） Total Revenues 54.4 51.1 +6.4% 54.5 (0.2%) 80.8% 80.1% Total Cost of +7.3% ― ― Reven

  5. Slide 5: Revenues

    Ⅱ- 2. Revenues Network Services Systems Integration (SI) Equipment Sales Unit: JPY million Internet Connectivity Services for Corporate Use Systems Construction ATM Operation Business Internet Connectivity Services for Home Use Systems Operation and Maintenance Outsourcing Services WAN Services FY12

  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 = 1H13 compared to 1H12 Pt. = points FY12: 84,395 1H13:4

  7. Slide 7: 1H Revenue YoY Change

    Ⅱ- 4. 1H Revenue YoY Change Unit: JPY billion ATM Operation Business and Equipment Sales Revenues Systems Construction and Equipment Sales Order Received Systems Integration Revenues (Construction and Operation and Maintenance) Breakdown of the increase: Network Services Revenues (Corporate and Cons

  8. Slide 8: Operating Cost and Income YoY Change

    Ⅱ- 4. Operating Cost and Income YoY Change SG&A Total Costs related to Systems Integration Unit: JPY billion Personnel-related costs Cost for ATM Operation Business and Total Cost related to Network Services Equipment sales Operating Cost +0.53 +0.1 7.31 7.60 +1.68 8.47 +2.36 Personnel-related costs

  9. Slide 9: Network Services Revenues

    Ⅱ- 5. Network Services (1)Revenues Unit: JPY million YoY = 2Q13 compared to 2Q12 Total Contracted QoQ = 2Q13 compared to 1Q13 Bandwidth (Gbps) FY12: 65,232 1H13: 33,611 16,092 16,167 16,256 16,717 16,785 16,825 WAN Services Outsourcing Services Internet Connectivity Services for Home Use Internet Co

  10. Slide 10: Network Services Cost of Revenues

    Ⅱ- 5. Network Services (2)Cost of Revenues Unit: JPY million FY12: 50,692 1H13: 26,465 (Gross margin ratio： 22.3%) (Gross margin ratio： 21.3%) 12,764 12,619 12,589 12,721 13,242 13,223 Others Outsourcing Costs Personnel Related Costs Network Operation Related Costs Circuit Related Costs YoY = 2Q13 c

  11. Slide 11: Systems Integration (SI) Revenues

    Ⅱ- 6. 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 FY12: 15,825 1H13: 7,151 YoY = 2Q

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

    Ⅱ- 6. Systems Integration (SI) (2)Cost of Revenues Unit: JPY million FY12: 30,425 1H13: 15,765 (Gross margin ratio： 18.2%) (Gross margin ratio： 15.6%) YoY = 2Q13 compared to 2Q12 QoQ = 2Q13 compared to 1Q13 6,564 7,526 6,904 9,431 7,350 8,416 Purchasing Costs Outsourcing Costs Others Network Operati

  13. Slide 13: Number of Employees

    Ⅱ- 7. Number of Employees (No. of employees) 2,078 2,081 2,086 2,116 2,269 2,311 Contract worker Full time worker [Employee Distribution] Administration 14% Sales 19% Engineers 67% 3,741 3,858 3,902 3,979 4,212 4,254 Personnel related costs and (15.1%) (14.7%) (15.3%) (13.5%) (15.9%) (15.2%) expense

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

    Ⅱ- 8. SG&A Expenses/R&D YoY = 2Q13 compared to 2Q12 Unit: JPY million QoQ = 2Q13 compared to 1Q13 FY12: 14,101 1H13: 7,421 (13.3%) (13.6%) Research and Development Expenses 3,445 3,440 3,597 3,619 3,725 3,697 General and Administrative Expenses (13.9%) (13.1%) (14.1%) (12.2%) (14.1%) (13.2%) Sales a

  15. Slide 15: Operating Income and Net Income

    Ⅱ- 9. 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 16 67 81 75 81 160 FY12: 239 1H13:241 1H13 • 698 ATMs were placed as of Nov. 8, 201

  16. Slide 16: Summary of Consolidated Balance Sheets

    Ⅱ- 10. Summary of Consolidated Balance Sheets (Unit: JPY million) March 31, September 30, Changes 2013 2013 Cash and Cash Equivalents 12,259 25,782 +13,523 Accounts Receivable 18,765 16,707 (2,058) Inventories and Prepaid Expenses 5,995 7,757 +1,762 (Current and Noncurrent) Other Investments 3,771 5

  17. Slide 17: Consolidated Cash Flows

    Ⅱ- 11. Consolidated Cash Flows Operating Activities: Unit: JPY million YoY = 2Q13 compared to 2Q12 FY12: 9,639 1H13: 3,696 1H13 Operating Activities: Decrease in accounts receivable: JPY2,136 million Depreciation and amortization: JPY4,238 million Decrease in accounts payable: (JPY1,513 million)

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

    Ⅱ- 12. Other Financial Data (CAPEX etc.) CAPEX (Include Capital Leases): Unit: JPY million Cash Payment Capital Lease FY12: 10,405 1H13: 4,647 Adjusted EBITDA: *( ) % of total revenues FY12: 15,308 1H13: 7,247 (14.4%) (13.3%) Depreciation and Amortization: FY12: 7,556 1H13: 4,238 17

  19. Slide 19: Developments of Cloud Business

    Ⅲ- 1. Developments of Cloud Business ■Cloud Revenue ■Expansion of Client Base MRC over JPY0.5 million Unit: JPY billion FY11 FY12 FY13 MRC over JPY1 million As of Sep. 2013 1st Half (Sep.) 1.2 (0.25) 2.6 (0.49) 4.7 (0.83) MRC(Monthly Recurring Charge) 1,060 users 2nd Half (Mar.) 1.9 (0.37) 3.6 (0.66

  20. Slide 20: FY2013 Financial Target (Remain unchanged from May 15, 2013)

    Ⅲ- 2. FY2013 Financial Target (Remain unchanged from May 15, 2013) Due to seasonal factors, revenue volume is larger in 2nd half than 1st half while fixed type expenses such as personnel-related expenses tend to increase from the beginning of a fiscal year 1H13 operating income decreased YoY mainl

  21. Slide 21: FY2013 Dividend Forecast

    Ⅲ- 3. FY2013 Dividend Forecast (Remain unchanged from May 15, 2013) IIJ conducted a 1:200 stock split on common stock with an effective date of October 1, 2012. Dividend figures shown below are retroactively adjusted to reflect the stock split. Target cash dividends per share remains unchanged after

  22. Slide 22: 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 abou

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