Internet Initiative Japan Inc. · TSE:3774

Internet Initiative Japan — Q1 FY2019 Earnings Presentation

20 slides from Internet Initiative Japan's earnings presentation, Aug 7, 2019

  1. Slide 1: Consolidated Financial Results for 1Q FY2019

    Consolidated Financial Results for 1Q FY2019 We changed our accounting principles from the Generally Accepted Accounting Principles in the U.S. (“U.S. GAAP”) to the International Financial Reporting Standards (IFRS) from the filing of FY2018 annual report “Yuka- shoken-houkokusho” which was filed on

  2. Slide 2: Agenda

    Agenda Ⅰ. Summary of 1Q19 Financial Results Ⅱ. Consolidated Financial Results for 1Q19 Ⅲ. Other Information © Internet Initiative Japan Inc. 1

  3. Slide 3: Summary of 1Q19 Financial Results

    Ⅰ. Summary of 1Q19 Financial Results % ＝Year over Year (YoY) comparison Solid business developments & strong earnings along with favorable demand Total Revenues JPY49.8 billion +11.1% Operating Profit JPY1.4 billion +58.8% (*) (*) The growth rate shows the comparison for the normalized 1Q18 operatin

  4. Slide 4: Consolidated Financial Results for 1Q19

    Ⅱ- 1. Consolidated Financial Results for 1Q19 Unit: JPY billion % of Revenues % of Adjusted Revenues [% of Revenues] % of Revenues % of Revenues (*1) Compared to 1Q18 1Q18 Adjusted Results 1Q19 Results Adjusted Results 1H19 Targets FY19 Targets [1Q18 Results] [Compared to 1Q18 Results] Apr. 2019 - J

  5. Slide 5: Revenues

    Ⅱ- 2. Revenues Unit: JPY million [ ] , YoY = Year over year comparison NW Services Systems Integration (SI) Internet Connectivity Services (Enterprise) Systems Construction (including equipment sales) Internet Connectivity Services (Consumer) Systems Operation and Maintenance Outsourcing Service WAN

  6. Slide 6: Cost of Sales & Gross Profit Ratio

    Ⅱ- 3. Cost of Sales & Gross Profit Ratio Unit: JPY million Cost of Sales: NW Services SI ATM Operation Business [ ] , YoY = Year over year comparison Gross profit ratio: NW Services SI Total Gross profit  Total  1Q19: JPY7,382 million +16.3% YoY from 1Q18 adjusted results  NW Services  1Q19: JPY

  7. Slide 7: Network Services (1) Revenues

    Unit: JPY million Ⅱ- 4. Network Services (1) Revenues [ ] , YoY =Year over year comparison QoQ = 1Q19 compared to 4Q18 WAN Services Outsourcing Services Internet Connectivity Services (consumer) NW Services Revenues Internet Connectivity Services (enterprise) Total Mobile Revenue Internet Connectiv

  8. Slide 8: Network Services (2) Cost of Sales

    Unit: JPY million Ⅱ- 4. Network Services (2) Cost of Sales [ ] , YoY =Year over year comparison QoQ = 1Q19 compared to 4Q18 Outsourcing-related costs* Cost of NW Services Others Personnel-related costs  1Q19: +5.6% YoY, -1.2% QoQ from 1Q18 adjusted Network operation-related costs results, respectiv

  9. Slide 9: Systems Integration (SI) (1) Revenues

    Unit: JPY million Ⅱ- 5. Systems Integration (SI) (1) Revenues [ ] , YoY = Year over year comparison QoQ = 1Q19 compared to 4Q18 Systems construction Systems operation & maintenance revenues Order backlog (sum of systems construction & equipment sales) revenues (includes Cloud revenues within systems

  10. Slide 10: Systems Integration (SI) (2) Cost of Sales

    Ⅱ- 5. Systems Integration (SI) (2) Cost of Sales Unit: JPY million Purchasing costs [ ] , YoY = Year over year comparison QoQ = 1Q19 compared to 4Q18 Outsourcing-related costs* Others Network operation-related costs Cost of SI Personnel-related costs  1Q19: +19.3% YoY • 1Q19-end number of SI-relate

  11. Slide 11: Number of Employees

    Ⅱ- 6. Number of Employees YoY = Year over year comparison Contract worker (personnel) Full time worker (personnel) Employee Distribution Administration 12% Sales 17% Engineers 71%  Hired 171 new graduates in Apr. 2019 (175 in Apr. 2018, 148 in Apr. 2017)  FY19 net addition of employees is planned

  12. Slide 12: SG&A etc.

    Ⅱ- 7. SG&A etc. Unit: JPY million [ ] , YoY = Year over year comparison Research & development expenses Commission expenses Others Personnel expenses SG&A etc. ( ) % of total revenues  1Q19 commission expenses +JPY172 million YoY  Commission expenses such as for FY18: 22,652 [+5.5%] mobile service

  13. Slide 13: Profit

    Ⅱ- 8. Profit Unit: JPY million Operating profit Profit for the period attributable to owners of the parent Operating profit ratio Profit  Profit before tax  1Q19: JPY1,369 million FY18 Operating profit: 6,023 (+45.2% from 1Q18 adjusted results) • Dividend income: JPY61 million FY18 Profit for the

  14. Slide 14: Consolidated Statements of Financial Position (Summary)

    Ⅱ- 9. Consolidated Statements of Financial Position (Summary) Unit: JPY million Mar. 31, 2019 June 30, 2019 Changes Cash and cash equivalents 31,958 32,893 +935 Trade receivables 33,376 31,264 (2,112) Inventories 3,403 1,836 (1,568) Prepaid expenses (current and non-current) 16,560 20,230 +3,670 Tan

  15. Slide 15: Consolidated Cash Flows

    Ⅱ- 10. Consolidated Cash Flows Unit: JPY million YoY = Year over year comparison Operating Activities FY18: 25,152 Major YoY Breakdown Change Profit before tax 1,369 -56 Depreciation and amortization 7,164 +3,555 (related to right-of use assets under operating lease contracts 3,127 +3,127) Changes i

  16. Slide 16: Other Financial Data

    Ⅱ- 11. Other Financial Data Unit: JPY million CAPEX CAPEX-related depreciation and amortization* Cash CAPEX Finance lease FY18: 15,083 FY18: 13,867 * CAPEX-related depreciation and amortization is calculated by excluding Adjusted EBITDA* depreciation and amortization of assets that do not have the n

  17. Slide 17: KPIs of Services

    Ⅲ - 1. KPIs of Services Revenue unit: JPY billion % = Year over year comparison Mobile revenue & subscription Security-related revenue  1Q19-end total subscriptions: 2,786 thousand (+14.0%)  Each services such as SOC, DDoS Protection, Cloud-based  1Q19 total revenue: JPY11.34 billion (+14.2%) Web

  18. Slide 18: Recent Business Developments

    Ⅲ - 2. Recent Business Developments DeCurret Jul. Raised Capital: Enterprise Shareholders Increased to 30 (Largest shareholder IIJ with 30% ownership) Full-MVNO/IoT First in Japan to launch eSIM services Full-MVNO/IoT Full-MVNO Services adopted by Motorola Solutions Full-MVNO/IoT Jun. Started PoC of

  19. Slide 19: Financial Targets (remain unchanged)

    Ⅲ - 3. Financial Targets (remain unchanged) Unit: JPY billion YoY = Year over year comparison % of Revenues % of Revenues % of Revenues Compared to 1H18 1Q19 Results 1H19 Targets Adjusted Results FY19 Targets YoY Apr. 2019 - Jun. 2019 Apr. 2019 - Sep. 2019 [Compared to 1H18 Results] Apr. 2019 - Mar.

  20. Slide 20: Disclaimer

    Disclaimer 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 about its business and

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