Internet Initiative Japan Inc. · TSE:3774
Internet Initiative Japan — H1 2024 Earnings Presentation
48 slides from Internet Initiative Japan's earnings presentation, Nov 8, 2024
Slide 1: Presentation Material for Consolidated Financial Results for 1H24
Presentation Material for Consolidated Financial Results for 1H24 (April 1, 2024 to September 30, 2024) Internet Initiative Japan Inc. (IIJ) The Prime Market of the Tokyo Stock Exchange (Ticker symbol: 3774) November 8, 2024 Disclaimer Statements made in this presentation regarding IIJ’s or manageme
Slide 2: Outline
Outline Ⅰ. 1H24 Summary P. 2 Ⅱ. 1H24 Financial Results P. 3 ~ P. 16 Ⅲ. Service & Business Developments, etc. P. 17 ~ P. 20 Appendix P. 21 ~ P. 26 【Reference】 Presentation material for company overview P. 27 ~ P. 46 • FY24 stands for a fiscal year from Apr. 1, 2024 to Mar. 31, 2025 • 1H24 stands for
Slide 3: 1H24 Summary
Ⅰ. 1H24 Summary Unit: JPY/¥ billion (bn), +%, YoY = Year over year comparison Net Profit is “Profit for the period attributable to owners of the parent” Seeing many NW renewal projects through Service Integration Large-scale projects as a new norm Strong revenue growth led by SI SI revenue: 1Q +32.5
Slide 4: Consolidated Financial Results
Ⅱ- 1. Consolidated Financial Results Unit: ¥ (JPY) billion YoY = Year over year comparison % of revenue % of revenue % of revenue % of revenue 1H24 Results 1H23 Results YoY 1H24 Targets YoY FY24 Targets YoY (Announced in Aug. 2024) (Announced in Aug. 2024) Apr. 2024 - Sep. 2024 Apr. 2023 - Sep. 2023
Slide 5: Year over Year Analysis
Ⅱ- 2. Year over Year Analysis Unit: ¥ (JPY) billion (bn) GP = Gross Profit Revenues 1H23 +18.82 1H24 128.20 147.02 IP & Outsourcing services Consumer and enterprise Favorable demands for steadily grew IoT strongly grew NW renewal, etc. • NW services (excl. Mobile) revenues are calculated by deductin
Slide 6: Revenues
Ⅱ- 3. Revenues Unit: ¥ (JPY) million [ ], YoY = Year over year comparison Internet Connectivity Services (Enterprise) Systems Integration (SI) Systems Construction (including equipment sales) Internet Connectivity Services (Consumer) Systems Operation and Maintenance Network (NW) Services Outsourcin
Slide 7: Cost of Revenues & Gross Profit Ratio
Ⅱ- 4. Cost of Revenues & Gross Profit Ratio Unit: ¥ (JPY) million [ ] , YoY = Year over year comparison Gross margin: NW (Network) Services SI (Systems Integration) Total Cost of revenues: NW (Network) Services SI (Systems Integration) ATM Operation Business 28.1% 28.5% 29.4% 28.9% 27.2% 27.7% 23.0%
Slide 8: Network (NW) Services (1) Revenues
Ⅱ- 5. Network (NW) Services (1) Revenues Unit: ¥ (JPY) million [ ] , YoY = Year over year comparison Total Contracted Bandwidth (Gbps) WAN (Wide Area Network) Services Internet Connectivity (enterprise) Services Outsourcing Services 1H24: ¥23.56 bn, +7.3% YoY Internet Connectivity (consumer) Serv
Slide 9: Network (NW) Services (2) Cost of Revenues
Ⅱ- 5. Network (NW) Services (2) Cost of Revenues Unit: ¥ (JPY) million [ ] , YoY = Year over year comparison Circuit-related costs (Internet backbone, WAN lines, etc.) 1H24 Circuit-related costs remained stable Outsourcing-related costs (mobile infrastructure related costs such as interconnectivit
Slide 10: Systems Integration (SI) (1) Revenues
Unit: ¥ (JPY) million Ⅱ- 6. Systems Integration (SI) (1) Revenues [ ] , YoY = Year over year comparison MRR = Monthly Recurring Revenue Systems Construction revenues (including equipment sales) Systems operation & maintenance revenues for on-premise system Cloud revenues such as private cloud which
Slide 11: Systems Integration (SI) (2) Cost of Revenues
Ⅱ- 6. Systems Integration (SI) (2) Cost of Revenues Unit: ¥ (JPY) million [ ] , YoY = Year over year comparison Purchasing costs (Equipment, etc.) Outsourcing-related costs (SI-related outsourcing personnel costs, etc.) Others Network operation-related costs (Depreciation cost such as for cloud faci
Slide 12: Human Capital Disclosure
Ⅱ- 7. Human Capital Disclosure Number of Employees (consolidated basis) Personnel-related costs & expenses (consolidated basis) Contract worker (personnel) Breakdown of Employees Unit: ¥ (JPY) million Admin. 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 Full-time worker (personnel) approx.10% Consolidated 9,358 9,2
Slide 13: SG&A, etc.
Ⅱ- 8. SG&A, etc. Unit: ¥ (JPY) million [ ] , YoY = Year over year comparison QoQ = Quarter over quarter comparison Research & development expenses Commission expenses Others (including other income and other expenses) Personnel-related expenses ( ) % of total revenues 1H23: 17,109 [+11.7%] 1H24: 18,
Slide 14: Profit
Unit: ¥ (JPY) million Ⅱ- 9. Profit [ ] , YoY = Year over year comparison Operating margin Operating profit Operating profit 1H24: ¥11.78 bn, -2.5% YoY Net profit • Profit decreased by approx. ¥1.6 bn due to the VMware license-related impact • 2Q24(3 months) operating profit: ¥7.30 bn, +3.2%, ret
Slide 15: Consolidated Statements of Financial Position (Summary)
Ⅱ- 10. Consolidated Statements of Financial Position (Summary) Unit: ¥ (JPY) million Mar. 31, 2024 Sep. 30, 2024 Changes Mar. 31, 2024 Sep. 30, 2024 Changes Cash & cash equivalents 45,474 33,665 (11,809) Trade & other payables 25,435 25,732 +297 Trade receivables 45,683 42,788 (2,895) Borrowings (cu
Slide 16: Consolidated Cash Flows
Ⅱ- 11. Consolidated Cash Flows Unit: ¥ (JPY) million YoY = Year over year comparison Operating Activities 1H23: 16,051 1H24: 10,527 1H24 Major FY23: 40,780 Breakdown YoY Change 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 Profit before tax 11,116 (1,436) 11,035 11,536 13,193 12,545 Depreciation and amortization 15
Slide 17: Other Financial Data
Ⅱ- 12. Other Financial Data Unit: ¥ (JPY) million [ ] , YoY = Year over year comparison CAPEX CAPEX-related depreciation and amortization Cash CAPEX Finance lease 1H23: 10,544 [+4.7%] 1H24: 15,308 1H23: 7,747 [+2.1%] 1H24: 8,450 FY23: 22,521 [+8.1%] [+45.2%] FY23: 15,634 [+2.3%] [+9.1%] 9,880 3,981
Slide 18: Acquisition of large-scale projects by Service Integration model
Ⅲ- 1. Acquisition of large-scale projects as a new norm by Service Integration model Large-scale projects acquired in FY24 Project size Acquisition Project overview Main revenue recognition Timing of revenue recognition (approx.) periods Information infrastructure system for a public sector organiz
Slide 19: Launched a new joint banking system platform for Japanese regional banks
Ⅲ- 2. Launched a new joint banking system platform for Japanese regional banks with IBM Japan and MUFG Bank IIJ’s part in this initiative Areas where IIJ can provide independently Internet Mainframe joint platform Distributed system joint platform Relocation sites of DCs Digital services platform OA
Slide 20: Security Business
Ⅲ- 3. Security Business Unit: ¥ (JPY) billion ( ) = Year over year comparison MRR ＝Monthly Recurring Revenue Security service (MRR) largely grew along with continuous strong demands Mail Security Web GW Full outsource of mail system, Full outsource of web security, URL filtering, 1H23: 14.86 [+1
Slide 21: Mobile and IoT
Ⅲ- 4. Mobile and IoT Unit: ¥ (JPY) billion (bn) %, YoY = Year over year comparison QoQ = Quarter over quarter comparison Mobile Subscription (Subs.) Enterprise mobile (deducting MVNE from IIJ Mobile) 1H24 revenue: ¥7.25 bn (+¥0.66 bn YoY) Subscriptions (Subs.) 1H24-end subs.: 2,724 thousand (+
Slide 22: FY24 Financial Targets and Dividend Forecast
Unit (excluding dividend per share): ¥ Appendix FY24 Financial Targets and Dividend Forecast (Excerpt from Aug. 2024 disclosure material) (JPY) billion (bn) YoY = Year over year comparison FY24 New targets FY24 Previous targets Background of FY24 Financial Targets revision Revised in August, 2024 An
Slide 23: FY24 Financial Targets, Year over Year Analysis
Appendix FY24 Financial Targets, Year over Year Analysis (Excerpt from Aug. 2024 disclosure material) Unit: ¥ (JPY) billion Revenues FY23 Result +35.92 FY24 Target 276.08 312.0 • NW services (excl. Mobile) revenues are calculated by deducting the below mentioned Mobile services revenues from total N
Slide 24: FY24 Dividend Forecast
Appendix FY24 Dividend Forecast (revised in Aug. 2024) Unit: ¥ Basic shareholders’ return policy: Continuous and stable dividend payment while considering the need to have retained earnings for the enhancement of financial position, mid-to-long term business expansion and future investment Divid
Slide 25: Acquired large-scale Service Integration projects
Appendix Acquired large-scale Service Integration projects Services provided by IIJ SI provided by IIJ Educational Information NW for Chiba city Integrated information system for public safety org. SASE案件(多数) Large-scale SASE project for a global company Internet IIJ GIO Managed Prisma Access UOM
Slide 26: NTT Docomo's Mobile data interconnectivity charge
Appendix NTT Docomo’s Mobile data interconnectivity charge (Mbps Unit charge, monthly) Fiscal Year FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 Method Actual cost method Future cost method: MNOs are to disclose the charges for next three years based on their prediction about cost etc. Announced in M
Slide 27: Comparison between the old & new plans of consumer mobile
Appendix Comparison between the old & new plans of consumer mobile Including tax Old New: GigaPlans (Apr. 2021~) GigaPlans: by data plans As of Sep. 30, 2024 With voice ¥1,760 With voice ¥850 Minimum Start Plan 2Giga Plan 40GB less than 1% (3GB) (2GB) 30GB 1% Data-only ¥990 Data-only ¥740 50GB less
Slide 28: Presentation material for company overview
【Reference】 Presentation material for company overview P. 27 ~ P. 46 © Internet Initiative Japan Inc. 27
Slide 29: Company Profile
Business Company Profile About IIJ Model Growth Strength Strategy IIJ has been taking initiatives in Internet Infrastructure field in Japan Established December 1992 (The first established full-scale ISP in Japan) Number of Employees 5,176 (approx. 70% engineers) Large Shareholders NTT Group, KDDI,
Slide 30: Management Structure (from June 2024)
Business Management Structure (from June 2024) About IIJ Model Growth Strength Strategy Outside independent directors: 5 directors, 42% of the total directors (12 directors) Female officers: 3 officers, 19% of the entire Board (12 directors, 4 Company Auditors) Koichi Suzuki Satoshi Murabayashi
Slide 31: From ISP to Total Network Solution Provider
Business From ISP to Total Network Solution Provider About IIJ Model Growth Strength Strategy Systems Integration (SI) revenue: Systems construction One time revenue (including equipment sales) EMERGE Systems operation and maintenance Network enhancement, (including private Cloud) Cloud, consumer mo
Slide 32: IIJ as a Total Network Solution Provider
Business IIJ as a Total Network Solution Provider About IIJ Model Growth Strength Strategy Offers various network services and systems integration together in many projects 15,000 customers Approx. (as of Mar. 31, 2024) (Japanese companies, central government agencies, local governments, consumer IS
Slide 33: Data center (DC)
ビジネス Data center (DC) IIJについて モデル 強み 成長戦略 Operate 16 DCs in Japan, 2 of which are owned by IIJ Matsue DCP (opened in Apr. 2011) Shiroi DCC (opened in May 2019) (as of Sep. 2024) Objective Own service facility Expanding own DC capacity along with growing demands for IIJ services • First in Japan
Slide 34: Extensive Service Lineups
Business Extensive Service Lineups About IIJ Model Growth Unit: ¥ (JPY) billion (bn) Strength Strategy FY23 Revenue category About Business Situation & Outlook revenue Core service providing from the foundation Matured market (hard to entry) Highly reliable dedicated connectivity services for
Slide 35: Monthly Recurring Revenue Accumulation
Business Monthly Recurring Revenue Accumulation About IIJ Model Unit: ¥ (JPY) billion (bn) Growth % = Year over year change Strength Strategy FY18 FY19 FY20 FY21 FY22 FY23 Revenues 192.4 204.5 213.0 226.3 252.7 276.1 ATM operation business (+9.2%) (+6.3%) (+4.2%) (+6.3%) (+11.7%) (+9.2%) Systems con
Slide 36: Expanding economies of scale by Service Integration
Business About IIJ Expanding economies of scale by Service Integration Model Unit: ¥ (JPY) billion Growth approximate curve Strength Strategy Systems construction revenues (including equipment sales) NW service (excluding mobile) revenues Systems operation & maintenance revenues 105.21 71.92 96.65 6
Slide 37: Capex and Business Developments
Business Capex and Business Developments About IIJ Model Unit: ¥ (JPY) billion (bn) Growth Strength Strategy FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 Revenues 157.8 176.2 192.4 204.5 213.0 226.3 252.7 276.1 Stronger demands for enterprise network services 27.8% 27.5% 28.7% NW service gross profit 17.
Slide 38: Service & Solution Development Capability
Business Service & Solution Development Capability About IIJ Model Growth Strength Strategy Initiate the market by continuously developing innovative various network-related services & solution in-house © Internet Initiative Japan Inc. 37
Slide 39: Excellent Customer Base
Business Excellent Customer Base (Number of IIJ Group’s clients: approx. 15,000 as of March 31, 2024) About IIJ Model Growth Strength Strategy Through reliable operation, continuous use of Internet connectivity services since the inception of IIJ Our reliable infrastructure operation and cross-s
Slide 40: Competitive Advantages
Business Competitive Advantages About IIJ Model Growth Strength Strategy Against telecom carriers, IIJ Against systems integrators (SIers), IIJ • Has highly skilled IP (Internet Protocol) engineers • Operates one of the largest Internet backbone (SIers do not) • Is faster to move than bureaucratic o
Slide 41: NW Services and SI provided together as a Total Solution
Business NW Services and SI provided together as a Total Solution About IIJ Model Growth Strength Strategy Systems Integration (SI) to meet specific requirements cannot be covered by NW services Network (NW) services (in-house developed) Secure Web Managed Cloud Content Simple Secure MX IIJ ID DNS P
Slide 42: New Mid-term Plan (FY24 ~ FY26)
Consolidated base Business About IIJ New Mid-term Plan (FY24 ~ FY26) Net Profit is “Profit for the period attributable to owners of the parent” Model “times” are calculated by comparing FY26/FY26-end to FY23/FY23-end Growth The figures below are all assumed targets Strength Strategy Accelerate busin
Slide 43: New Mid-term Plan's Financial Outlook
Business About IIJ New Mid-term Plan’s Financial Outlook Model Growth Unit: ¥ (JPY) billion Strength Strategy Breakdown image of financial outlook Total FY20 FY23 FY26 outlook Gross FY20 FY23 FY26 outlook Operating FY20 FY23 FY26 outlook Revenue (one before (Previous Mid-term (New Mid-term’s Profit
Slide 44: Mid-to-long Term Vision
Business About IIJ Mid-to-long Term Vision Model Growth Strength Strategy The figures mentioned below are all assumed status and image Beyond 5,000 Previous Mid-term New Mid-term Mid-to-long Term Vision *5,000 is derived from the Japanese unit of ¥5,000 oku (oku = one hundred million) which is ¥500
Slide 45: Enterprise internal NW & systems in Japan becoming to change
Business Enterprise internal NW & systems in Japan becoming to change About IIJ Model Growth Strength Strategy 30 years ago Nowadays IIJ covered external NW with Internet IIJ’s opportunities rise to cover entire NW & system Carriers & SIers covered internal NW & systems utilizing various NW function
Slide 46: Financial Business zone: DeCurret's business progress
Business About IIJ The progress of Decurret’s business Model Growth Strength Strategy About DeCurret The first commercial project about digital currency(DCJPY) in Japan • Shareholder: 43 companies, IIJ ownership: 34.8% (an equity method investee) Issuer of digital GMO Aozora Net Bank, Ltd. • Busines
Slide 47: Market Environment & Growth Forecast, etc.
Business About IIJ Market Environment & Growth Forecast, etc. Model Growth Strength Strategy Historical traffic data of major domestic IX Operation where IT department spends the most time Top 7 items are shown below Peak traffic Study about replacing of the current systems 72 Responding to in‐house
Slide 48: © Internet Initiative Japan Inc.
© Internet Initiative Japan Inc.
Internet Initiative Japan — H1 2024 Earnings Presentation on 6ix