Internet Initiative Japan Inc. · TSE:3774
Internet Initiative Japan — Investor Presentation (March 2016)
44 slides from Internet Initiative Japan's investor presentation, March 2016
Slide 1: Corporate Overview
Internet Initiative Japan Inc. Corporate Overview February and March 2016 TSE1:3774 NASDAQ:IIJI © 2016 Internet Initiative Japan Inc.
Slide 2: About IIJ
About IIJ Internet Technology Initiatives in Japan Technology and Service Developments ISP to Total Network Solution Provider Competitive Advantages Over 8,500 Excellent Enterprise Customers Comprehensive Line-up of IT Services Target Blue-chip’s IT Shift Growth Strategy Leveraging Blu
Slide 3: About IIJ
About IIJ Internet Technology Initiatives in Japan Technology and Service Developments ISP to Total Network Solution Provider Competitive Advantages Over 8,500 Excellent Enterprise Customers Comprehensive Line-up of IT Services Target Blue-chip’s IT Shift Growth Strategy Leveraging Blu
Slide 4: Internet Technology Initiatives in Japan
Internet Technology Initiatives in Japan Established December 1992 Number of Employees* 2,977 (approx. 70% engineers) (Consolidated) Listed Markets NASDAQ (IIJI), TSE1 (3774) Large Shareholders** NTT (21.6%), Koichi Suzuki (5.6%*), NTT Communications (4.4%) *Jointly owned by Mr. Suzuki’s wholly owne
Slide 5: Technology and Service Developments
Technology and Service Developments Overseas SI Projects BigData Solution SDN/NFV FX Initiate the market by developing Application Container Cloud Service In US & China & DC network-related services Development Cloud UK & Singapore Systems Computing Operation IPTV “IIJ GIO” AI Platform SACM Large Vo
Slide 6: ISP to Total Network Solution Provider
ISP to Total Network Solution Provider Revenue (JPY million) Systems Integration: FY15 revenue target Systems construction JPY139 billion Systems operation and maintenance EMERGE Network Services: One-time Revenue Cloud Computing WAN services Outsourcing services Internet connectivity services BLOOM
Slide 7: Competitive Advantages
About IIJ Internet Technology Initiatives in Japan Technology and Service Developments ISP to Total Network Solution Provider Competitive Advantages Over 8,500 Excellent Enterprise Customers Comprehensive Line-up of IT Services Target Blue-chip’s IT Shift Growth Strategy Leveraging Blu
Slide 8: Over 8,500 Excellent Enterprise Customers
Over 8,500 Excellent Enterprise Customers Cover Most of Top 10 Revenue Companies Revenue Distribution by Industry The number of clients among the top 10 companies in each industry. 10 10 9 Electronic Construction Information/Telco appliances 9 9 9 Securities Retail Wholesale 8 7 9 Machinery Insuranc
Slide 9: Comprehensive Line-ups of IT Services
Comprehensive Line-ups of IT services Revenues Services Business status • Enjoy/dominate matured market • Primary connectivity for HQ Internet • Gradual revenue increase by • High-performance dedicated connectivity Connectivity increasing contracted • Redundant connectivity for multi-site (Enterpris
Slide 10: Target Blue-chip's IT Shift
Target Blue-chip’s IT Shift Cloud Computing Services Carriers Systems Integrators Internet Connectivity Services Network Integration Outsourcing Services Systems Operation WAN Services Private Cloud Legacy Network Services Legacy Systems i.e. telephone i.e. mainframe IIJ’s differentiation points tow
Slide 11: Growth Strategy
About IIJ Internet Technology Initiatives in Japan Technology and Service Developments ISP to Total Network Solution Provider Competitive Advantages Over 8,500 Excellent Enterprise Customers Comprehensive Line-up of IT Services Target Blue-chip’s IT Shift Growth Strategy Leveraging Blu
Slide 12: Leveraging Blue-chip Customer Base by Cross-selling
Leveraging Blue-chip Customer Base by Cross-selling Systems construction Internet & Systems WAN services operation Over 8,500 Client Base Outsourcing services Increase revenues Room to increase revenue from per customer the existing customers Revenues per Customer Number of Customers Source: IIJ’s F
Slide 13: Leveraging Blue-chip Customer Base by Cross-selling: Revenue Targets
Leveraging Blue-chip Customer Base by Cross-selling Unit: JPY billion FY15 FY14 Total revenue target Total revenue 139 (+13.0% YoY) FY13 123.1 (+7.7%YoY) Total revenue 114.3 (+7.6% YoY) Systems 3.6 construction 2.2 2.8 1.7 20.4 18.7 Systems operation Cloud services & maintenance 27.8 23.8 approx. 14
Slide 14: Cloud Business Developments
Cloud Business Developments Cloud Market in Japan N O Private Cloud Market Growth W Mostly for Gaming companies, Some Many simple JPY1.8 trillion IT service advanced mission providers as systems integrated critical 3 times (web, file early adopters systems systems servers) Average system life cycl
Slide 15: Cloud Business Developments: Revenue and Customers
Cloud Business Developments Revenue Growth (unit JPY billion) Customer Base SBI Holdings NTT DOCOMO Ricoh Company Large Game Customers TOMY COMPANY Nomura Securities Tokyo Stock Exchange Corporate Users 14 Nippon Life Insurance SHIMIZU 12.3 Toray Industries, Inc. Company CORPORATION 9.8 16% …. and m
Slide 16: Mobile Business Developments
Mobile Business Developments MVNO Market in Japan MVNO Penetration in Japan (unit JPY billion) 160 million mobile subscription in total MVNO subscription 3 MNOs dominate SIM subscription MVNO in early stage, Consumer services began 2012 Dec. 2013 Dec. 2014 Mar. 2015 Sep 2015 MVNO penetration
Slide 17: Mobile Business Developments: Competitive Advantage
Mobile Business Developments IIJ’s Competitive Advantage For corporate Consumer Market Share Blue-Chip Client Base SI + Cloud for M2M/IoT Large Scale NW Infra. Reliable, Redundant Security, GW Solution Services Development For consumers High Satisfaction MVNE Strategy Sales Partnerships Fast, Re
Slide 18: Enhancing Business Investments
Enhancing Business Investments Unit: JPY billion FY10 FY11 FY12 FY13 FY14 FY15 Target 139.0 1Q-3Q15 Revenue 99.4 82.4 97.3 106.2 114.3 123.1 (+13.1%YoY) 6.5 Operating 1Q-3Q15 Income 4.1 4.14 6.35 7.75 5.72 5.08 (+7.6%YoY) Overseas Hire over 100 Consumer mobile New NW “Omnibus” Business Cloud(De
Slide 19: Line-ups to be Integrated for New IT Demands
Line-ups to be Integrated for New IT Demands Mobile Internet WAN BigData/ IoT/M2M Security Systems Real time analysis (smart-metering..) Integration DDoS attack Disaster Recovery Internet streaming systems 4K/8K Malware Targeted Website email Cloud computing resources Hacker © 2016 Internet Initiati
Slide 20: Financials
About IIJ Internet Technology Initiatives in Japan Technology and Service Developments ISP to Total Network Solution Provider Competitive Advantages Over 8,500 Excellent Enterprise Customers Comprehensive Line-up of IT Services Target Blue-chip’s IT Shift Growth Strategy Leveraging Blu
Slide 21: Summary of 1Q-3Q15 Financial Results
Summary of 1Q-3Q15 Financial Results Resulted as planned: continuous revenue growth absorbed costs increase, led to Income growth < 1Q-3Q15 > < FY15 Targets > Revenues JPY99.38 billion up 13.1% JPY139.0 billion up 13.0% Gross margin JPY17.79 billion up 8.2% JPY25.1 billion up 13.7% Operating income
Slide 22: FY2015 Financial Target
FY2015 Financial Target (Disclosed on May 15, 2015) Unit: JPY billion FY15 Target FY14 Actual FY15 Target to FY14 Actual (Apr. 2015 - Mar. 2016) (Apr. 2014 - Mar. 2015) Total Revenues 139.0 123.1 +15.9 +13.0% Gross Margin 25.1 22.1 +3.0 +13.7% Operating Income 6.5 5.1 +1.4 +28.1% Income before Incom
Slide 23: FY2015 Dividend Forecast
FY2015 Dividend Forecast 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. Interim Year-End JPY22.00 JPY22.00 JPY22.00 (forecast) JPY18.75 JPY16.25 JPY11.00 JPY11.00 JPY11.0
Slide 24: Appendix
About IIJ Internet Technology Initiatives in Japan Technology and Service Developments ISP to Total Network Solution Provider Competitive Advantages Over 8,500 Excellent Enterprise Customers Comprehensive Line-up of IT Services Target Blue-chip’s IT Shift Growth Strategy Leveraging Blu
Slide 25: Overseas Business Developments
Overseas Business Developments Financial Results (Unit: JPY billion) Overseas offices Main subsidiaries Est. Employees Business Provide mainly ISP services , Cloud Revenue IIJ America Inc. 1996 39 services and SI to the Japanese companies in the U.S.A. Provide mainly SI and Cloud services IIJ Europe
Slide 26: ATM Operation Business Developments
ATM Operation Business Developments Business Model Similar to “Seven Bank” model, high profitability • Seven Bank: 21,056 ATMs, revenue JPY106.0 billion, profit ratio 32.5% as of March 31, 2015 Placing ATMs in Pachinko parlors in Japan with dominant position • After long discussion, started to p
Slide 27: MVNO infrastructure cost & its impact for FY14 financial
MVNO infrastructure cost & its impact for FY14 financial NTT Docomo’s Monthly DCC per 10Mbps MVNO infrastructure cost for NTT Docomo: (JPY million) Data Communication Charge (“DCC”) 7.46 • Mobile infrastructure leasing fee from Docomo FY14 DCC (Data Communication Charge): • Fixed charge by bandwidth
Slide 28: Consolidated Financial Results for 3Q FY2015
Consolidated Financial Results for 3Q FY2015 Announced on February 9, 2016 © 2016 Internet Initiative Japan Inc. 28
Slide 29: Consolidated Financial Results for 1Q-3Q FY2015
Ⅱ- 1. Consolidated Financial Results for 1Q-3Q FY2015 Unit: JPY billion % of Revenues % of Revenues % of Revenues 1Q-3Q15 1Q-3Q14 YoY FY15 Target Change in % (Apr. 2015 - Dec. 2015) (Apr. 2014 - Dec. 2014) (Apr. 2015 - Mar. 2016) Total Revenues 99.4 87.8 +13.1% 139.0 82.1% 81.3% 81.9% Total Cost of
Slide 30: Revenues
Ⅱ- 2. Revenues Unit: JPY million Network Services Systems Integration (SI) Internet Connectivity Services (Enterprise) Systems Construction ( ) , YoY = compared to the same period in a previous year Internet Connectivity Services (Consumer) Systems Operation and Maintenance Outsourcing Service WAN S
Slide 31: 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 Unit: JPY million Gross margin ratio: Network Services Systems Integration(SI) Total Revenues YoY = compared to the same period in a previous year 1Q-3Q15 G
Slide 32: Network Services
Ⅱ- 4. Network Services (1)Revenues WAN Services Unit: JPY million Outsourcing Services Total Contracted YoY = compared to the same period in a previous year Bandwidth (Gbps) QoQ = 3Q15 compared to 2Q15 Internet Connectivity Services (Consumer) Internet Connectivity Services (Enterprise) ( ) compared
Slide 33: Network Services: Cost of Revenues
Ⅱ- 4. Network Services (2)Cost of Revenues Unit: JPY million Others YoY = compared to the same period in a previous year Outsourcing-related costs Personnel-related costs Network operation-related costs Circuit-related costs Cost of network services: ( ) Gross margin ratio 1Q-3Q15:up JPY6,948 mill
Slide 34: Systems Integration (SI) Revenues
Ⅱ- 5. Systems Integration (SI) (1)Revenues < Systems Construction > Unit: JPY million YoY = compared to the same period a previous year Systems Construction Revenues Systems Operation and Maintenance Revenues Order backlog ※Systems construction’s order backlog and Orders received order received incl
Slide 35: Systems Integration (SI) Cost of Revenues
Ⅱ- 5. Systems Integration (SI) (2)Cost of Revenues 1Q-3Q14: 28,179 (13.7%) 1Q-3Q15: 30,454 (15.2%) Unit: JPY million YoY = compared to the same period in a previous year FY14: 41,562 (13.8%) QoQ = 3Q15 compared to 2Q15 8,322 9,618 10,239 13,382 9,591 10,749 10,114 (12.0%) (15.7%) (13.0%) (14.2%) (13
Slide 36: Number of Employees
Ⅱ- 6. Number of Employees Unit: JPY million (Number of employees) 2,523 2,546 2,818 2,835 2,975 2,981 2,977 YoY =1Q-3Q15 compared to 1Q-3Q14 Contract worker Full time worker [Employee Distribution] Administration 12% Sales 17% Engineers 71% 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 Personnel related costs
Slide 37: SG&A Expenses/R&D
Ⅱ- 7. SG&A Expenses/R&D 1Q-3Q14: 12,662 (14.4%) 1Q-3Q15: 13,720 (13.8%) Unit: JPY million YoY =1Q-3Q15 compared to 1Q-3Q14 FY14: 16,997 (13.8%) 4,229 4,259 4,173 4,336 4,517 4,627 4,576 (15.4%) (14.4%) (13.6%) (12.3%) (14.4%) (13.7%) (13.4%) Research & development expenses General & administrative e
Slide 38: Operating Income and Net Income
Ⅱ- 8. Operating Income and Net Income Operating Income Net Income Attributable to IIJ Operating Margin Ratio Unit: JPY million YoY =1Q-3Q15 compared to 1Q-3Q14 1Q-3Q14 Operating 1Q-3Q15 Operating income: 3,786 income: 4,073 1Q-3Q14 Net income 1Q-3Q15 Net income attributable to IIJ: 2,314 attributabl
Slide 39: Consolidated Balance Sheets (Summary)
Ⅱ- 9. Consolidated Balance Sheets (Summary) Unit: JPY million Mar. 31, 2015 Dec. 31, 2015 Changes Cash and Cash Equivalents 21,094 18,234 (2,860) Accounts Receivable 22,252 20,226 (2,026) Inventories and Prepaid Expenses (Current and Noncurrent) 7,835 12,061 +4,226 Investments in Equity Method Inves
Slide 40: Consolidated Cash Flows
Ⅱ- 10. Consolidated Cash Flows < Operating Activities > Unit: JPY million YoY = 1Q-3Q15 compared to1Q-3Q14 1Q-3Q FY14: 10,012 1Q-3Q FY15: 7,811 FY14: 12,912 1Q-3Q15 Operating Activities Major YoY Breakdown Change Net income 2,688 +316 Depreciation and amortization 7,294 +77 Fluctuation of operating
Slide 41: Other Financial Data (CAPEX etc.)
Ⅱ- 11. Other Financial Data (CAPEX etc.) < CAPEX > Cash CAPEX Unit: JPY million Capital Lease 1Q-3Q FY14: 9,290 1Q-3Q FY15:12,211 FY14: 11,835 < Breakdown of CAPEX (unit: JPY billion) > FY13 FY14 1Q-3Q15 TOTAL CAPEX 12.6 11.8 12.2 Network update, back office 8.0 8.9 7.7 investment and others Cloud-r
Slide 42: Cloud Business Developments
Ⅲ - 1. Cloud Business Developments Cloud-related revenue (Unit: JPY billion) 3Q15 revenue (Unit: JPY billion) Large game customers 3Q15 cloud-related revenue recognition: General purpose SaaS 0.08 Business enterprise customers 86% in systems operation and maintenance, 14% in outsourcing (groupware e
Slide 43: Mobile Business Developments
Ⅲ - 2. Mobile Business Developments Total subscription & revenue IIJmio mobile & IIJ Mobile subscription & revenue Total subscription (thousand): Subscription IIJmio mobile (Consumer) Total revenue (JPY billion): (unit: thousand): 685 IIJ Mobile (Enterprise) 605 IIJ Mobile (Enterprise) Revenue 527 (
Slide 44: Forward-looking Statements and 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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