Internet Initiative Japan Inc. · TSE:3774

Internet Initiative Japan — FY2018 Earnings Presentation

24 slides from Internet Initiative Japan's earnings presentation, May 14, 2019

  1. Slide 1: Consolidated Financial Results for the Fiscal Year ended March 31, 2019 (FY2018)

    Consolidated Financial Results for the Fiscal Year ended March 31, 2019 (FY2018) Internet Initiative Japan Inc. TSE1 (3774) May 14, 2019 © Internet Initiative Japan Inc.

  2. Slide 2: Agenda

    Agenda Ⅰ. Summary of FY18 Financial Results P. 2 Ⅱ. Business Goals for FY19 P. 3 Ⅲ. Consolidated Financial Results for FY18 P. 4 ~ 16 Ⅳ. Service Developments P. 17 ~ 18 Ⅴ. FY19 Financial Targets P. 19 ~ 20 Ⅵ. Other Information P. 21 ~ 22 © Internet Initiative Japan Inc. 1

  3. Slide 3: Summary of FY18 Financial Results

    (※) Adjusted incomes exclude effect of the revision of U.S Ⅰ. Summary of FY18 Financial Results GAAP related to gains/losses on equity securities & funds Unit: JPY billion (bn), % ＝YoY comparison Revenue JPY192.3 bn +9.2% Adjusted EBITDA *1 JPY20.4 bn +6.8% Annual Dividend per Share JPY27.00 Gross M

  4. Slide 4: FY19 Business Goals

    YoY = Year over year comparison Ⅱ. FY19 Business Goals JPY billion (bn) Revenue: JPY204 billion +6.1%YoY Operating Income: JPY7 billion +12.8%YoY Enterprise Continue executing FY18 strategy to make them stable revenue & income growth drivers * with NW/Mobile/Virtual desktop/Cloud/Omnibus/Endpoint et

  5. Slide 5: Consolidated Financial Results for FY18

    Ⅲ - 1. Consolidated Financial Results for FY18 Unit: JPY billion % of Revenues % of Revenues % of Revenues FY18 Results FY17 Results Year over Year Change FY18 Targets (Apr. 2018 - Mar. 2019) (Apr. 2017 - Mar. 2018) (Apr. 2018 - Mar. 2019) Total Revenues 192.3 176.1 +9.2% +16.3 190.0 84.9% 84.0% 84.

  6. Slide 6: Revenues

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

  7. Slide 7: Cost of Revenues & Gross Margin Ratio

    Ⅲ - 3. Cost of Revenues & Gross Margin Ratio Unit: JPY million Cost of revenues: NW Services SI Equipment Sales ATM Operation Business [ ] , YoY = Year over year comparison Gross margin ratio: NW Services SI Total Gross Margin  Total  FY18: JPY28,988 million, +2.7% YoY  FY17: JPY28,233 million, +

  8. Slide 8: Network Services (1) Revenues

    Unit: JPY million Ⅲ - 4. Network Services (1) Revenues [ ] , YoY =Year over year comparison QoQ = 4Q18 compared to 3Q18 WAN Services Outsourcing Services Internet Connectivity Services (consumer) NW Services Revenues Internet Connectivity Services (enterprise) Total Mobile Revenue Internet Connecti

  9. Slide 9: Network Services (2) Cost of Revenues

    Unit: JPY million Ⅲ - 4. Network Services (2) Cost of Revenues [ ] , YoY =Year over year comparison QoQ = 4Q18 compared to 3Q18 Outsourcing-related costs* Cost of NW Services Others Personnel-related costs  FY18: +14.1% YoY  4Q18: +21.5% YoY, +8.6% QoQ Network operation-related costs • Due to Doco

  10. Slide 10: Systems Integration (SI) (1) Revenues

    Unit: JPY million Ⅲ - 5. Systems Integration (SI) (1) Revenues [ ] , YoY = Year over year comparison QoQ = 4Q18 compared to 3Q18 Systems construction Systems operation & maintenance revenues Order backlog (sum of systems construction & equipment sales) revenues Cloud revenues within systems operatio

  11. Slide 11: Systems Integration (SI) (2) Cost of Revenues

    Ⅲ - 5. Systems Integration (SI) (2) Cost of Revenues Unit: JPY million Purchasing costs [ ] , YoY = Year over year comparison QoQ = 4Q18 compared to 3Q18 Outsourcing-related costs* Others Network operation-related costs Personnel-related costs Cost of SI FY17: 53,612 [+5.1%] FY18: 55,227 [+3.0%]  F

  12. Slide 12: Number of Employees

    Ⅲ - 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) Unit: JPY million  FY19 net addition of em

  13. Slide 13: SG&A Expenses/R&D

    Ⅲ - 7. SG&A Expenses/R&D Unit: JPY million [ ] , YoY = Year over year comparison Research & development expenses General & administrative expenses Sales & marketing expenses ( ) % of total revenues FY17: 21,471 [+6.8%] FY18: 22,790 [+6.1%] SG&A  Sales & marketing expenses (13.2%) (12.6%) (11.8%) (1

  14. Slide 14: Income

    Unit: JPY million Ⅲ - 8. Income YoY = Year over year comparison (※) Adjusted means excluding effect of the revision of U.S GAAP related to gains/losses on equity securities & funds Operating income Adjusted net income Operating margin ratio attributable to IIJ (※) Income 6.2%  Adjusted income befor

  15. Slide 15: Consolidated Balance Sheets (Summary)

    Ⅲ - 9. Consolidated Balance Sheets (Summary) Unit: JPY million Mar. 31, 2018 Mar. 31, 2019 Changes Cash and Cash Equivalents 21,403 32,076 +10,673 Accounts Receivable 31,831 33,582 +1,751 Inventories 1,715 3,807 +2,092 Prepaid Expenses (Current and Noncurrent) 16,409 18,035 +1,626 Investments in Equ

  16. Slide 16: Consolidated Cash Flows

    Ⅲ - 10. Consolidated Cash Flows Unit: JPY million YoY = Year over year comparison Operating Activities FY17: 13,262 FY18: 23,445 Major Breakdown YoY Change Net income 2,893 (2,386) Depreciation and amortization 14,211 +1,846 Fluctuations of operating assets and liabilities 5,404 +8,929 Realized and

  17. Slide 17: Other Financial Data

    Ⅲ - 11. Other Financial Data Unit: JPY million CAPEX Depreciation and Amortization • Usual CAPEX (NW expansion) JPY10.7 bn Cash CAPEX • Cloud related JPY2.2 bn Capital Lease • Shiroi DC related JPY2.1 bn (over JPY1 billion postponed to FY19 ) FY17: 20,828 FY18: 14,989 FY17: 12,365 FY18: 14,211 Adjus

  18. Slide 18: FY18 Major Accomplishments

    YoY = Year over year comparison Ⅳ - 1. FY18 Major Accomplishments JPY billion (bn) Initial Targets Accomplishments Achieve income growth by Recurring revenue +9.7%YoY Stronger than expected recurring revenue accumulation NW services revenue* +11.0%YoY Mobile +18.8%YoY IP +4.5%YoY *Excluding hi-ho’s

  19. Slide 19: Major KPIs

    Ⅳ - 2. Major KPIs Revenue unit: JPY billion (bn), % = Year over year comparison Subs. = subscriptions (thousand), IIJ Mobile =enterprise, IIJmio Mobile =Consumer Mobile revenue & subscription Security  FY18-end total subs: Subs:  Total security revenue (Sum of security services and security- 2,745

  20. Slide 20: FY19 Consolidated Financial Targets

    Ⅴ - 1. FY19 Consolidated Financial Targets Unit: JPY billion (bn) YoY = Year over year comparison FY18 Results (US GAAP) FY19 Outlook (IFRS) % of Revenues % of Revenues % of Revenues % of Revenues 1H18 FY18 YoY 1H19 FY19 YoY (Apr.2018 - Sep. 2018) (Apr.2018 - Mar. 2019) (Apr. 2019 - Sep. 2019) (Apr.

  21. Slide 21: Factors Contributing to FY19 Operating Income Target Outlook

    Ⅴ - 2. Factors Contributing to FY19 Operating Income Target Outlook Operating Income YoY change in NW services gross margin YoY change in SI gross margin (incl. equipment sales) ±0 YoY change in ATM operation business gross margin YoY change in SG&A expenses Unit: JPY billion (bn) YoY = Year over ye

  22. Slide 22: Mobile Unit Charge (cost)

    Ⅵ - 1. Mobile Unit Charge (cost) Calculation Method of Mobile Unit Charge  Mobile unit charge is a unit charge used when Mobile Virtual Data Communication Cost + Profit Network Operators (MVNOs) such as IIJ purchase mobile Mobile Unit Charge＝ infrastructure from Mobile Network Operators (MNOs) such

  23. Slide 23: Gains/Losses on Marketable Equity Securities

    Ⅵ - 2. Gains/Losses on Marketable Equity Securities U.S. GAAP ~ FY2018 4Q17-end B/S 1Q18-beginning B/S 4Q18-end B/S Marketable equity Marketable equity Marketable equity securities at New Accounting Rule Applied securities*1at market value: securities*1at market value: market value: JPY7.6 billion J

  24. Slide 24: 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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