Internet Initiative Japan Inc. · TSE:3774

Internet Initiative Japan — Q1 FY2008 Earnings Presentation

21 slides from Internet Initiative Japan's earnings presentation, Aug 12, 2008

  1. Slide 1: 1st Quarter FY2008 Consolidated Financial Results

    1st Quarter FY2008 Consolidated Financial Results 2008.8.12 http://www.iij.ad.jp/IR/

  2. Slide 2: Consolidated Financial Results for 1Q FY2008

    -1. Consolidated Financial Results for 1Q FY2008 Unit: JPY billion % of Revenues % of Revenues Recurring revenues increased by 1Q08 1Q07 YoY 22.5% YoY due to the accumulation of recurring revenues. Total One-time revenues from systems Revenues 16.3 13.7 19.2% construction was an increased of 18.9% Y

  3. Slide 3: Revenues

    -2. Revenues Internet Connectivity Services Unit: JPY million Recurring One-time Systems Construction Revenues Outsourcing Services ( ) Revenues Equipment Sales Others Systems Operation and Maintenance 18,359 18,486 17,023 399 234 16,294 16,328 609 391 243 14,007 5,384 One-time 13,587 13,696 5,920 3

  4. Slide 4: Cost of Revenues and Gross Margin Ratio

    -3. Cost of Revenues and Gross Margin Ratio Cost of Revenues Connectivity and Outsourcing Services SI Equipment Sales Others Unit: JPY million Gross Margin Ratio Connectivity and Outsourcing Services SI Gross Margin Ratio 28.8% 25.0% 25.5% 24.0% 23.5% 22.3% 21.6% 21.6% 21.3% 23.1% 21.0% 21.0% 19.8%

  5. Slide 5: SG&A Expenses/R&D

    -4. SG&A Expenses/R&D Unit: JPY million Sales and Marketing Expenses General and Administrative Expenses 2,614 Research and Development 2,458 16.0% 2,301 2,372 13.3% 59 ( ) % of Revenues 2,221 14.1% 12.9% 61 13.0% 2,062 60 63 1,874 55 15.1% 1,744 1,747 13.8% 56 14.0% 12.5% 40 1,383 40 43 1,220 1,153

  6. Slide 6: Operating and Net Income

    -5. Operating and Net Income Operating Income Net Income Operating Margin Ratio Unit: JPY million 9.8% ‹Operating income: Down 7.3% 6.7% 6.9% 40.5% from 1Q07, down 77.2% 5.8% 6.2% 5.0% from 4Q07 4.5% 2,907 ¾ Operating loss from 4 newly 2.5% established subsidiaries were JPY166 million. ‹Net Income:

  7. Slide 7: Operating Income YoY Comparison

    -6. Operating Income YoY Comparison SI Gross Margin Equipment Sales etc. Unit: JPY million Gross Margin Connectivity and Outsourcing Services Gross Margin SG&A Expenses/ R&D Increase/Decrease amount of Gross Margin & SG&A Expenses/R&D (YoY) 1Q07 Operating Income 1Q08 Operating Income Negative Impact

  8. Slide 8: Results by Service – Connectivity and Outsourcing Services

    -7. Results by Service – Connectivity and Outsourcing Services (Revenues and Total Contracted Bandwidth) Total Revenues from Connectivity and Outsourcing Services Unit: JPY million Connectivity Services for Home Users Connectivity Services for Corporate Users Outsourcing Services Total Contracted Ba

  9. Slide 9: Results by Service – Connectivity and Outsourcing Services (Cost of Revenues)

    -8. Results by Service – Connectivity and Outsourcing Services (Cost of Revenues) Unit: JPY million 51 7,034 12 7,065 488 498 5,670 1,279 1,428 22 446 1,136 2,242 2,235 2,138 923 913 786 801 847 735 1,250 1,133 406 ‹ Total cost almost equaled to 4Q07 +JPY 31 million, up 0.4% ¾ increase in personnel

  10. Slide 10: Results by Service – SI (Revenue and Gross Margin Ratio)

    -9. Results by Service – SI (Revenue and Gross Margin Ratio) Revenue from SI Unit: JPY million Systems Construction Systems Operation and Maintenance Gross Margin Ratio Total 15,909 28.8% Systems construction& 25.0% 25.5% Equipment sales 4,762 24.0% 23.5% Systems Operation and 22.3% 21.6% 21.6% Main

  11. Slide 11: Results by Service – SI (Cost of Revenues)

    -10. Results by Service – SI (Cost of Revenues) Unit: JPY million 6,985 6,024 2,970 1,619 4,849 351 1,680 382 1,174 290 1,233 1,022 2,175 1,718 1,277 579 682 704 ‹ Cost of SI increased by 24.2% compared to 1Q07, decreased by 13.8% compared to 4Q07. ¾ Purchasing costs: down 45.5% because one-time rev

  12. Slide 12: New Business development

    -11. New Business development IIJ’s new business New subsidiaries IIJ Mobile Service On-Demand Solutions Inc. A mobile Internet connectivity service by MVNO ¾Established April 2008 (100% Consolidated subsidiary) exclusively for corporate use ¾They will start to provide network system for print-on st

  13. Slide 13: IIJ In-house Developed SEIL/SMF

    -12. IIJ In-house Developed “SEIL/SMF” In August 2008, IIJ's feature-rich SEIL routers, it’s patent technology for centralized network In August 2008, NEC released a new router management system, the “IIJ SMF” and IIJ “UNIVERGE IX2005-Z” compatible to “SMFv2” Mobile Service collaborated to a New Sol

  14. Slide 14: Consolidated Balance Sheets

    -13. Consolidated Balance Sheets Unit: JPY million June 30, March 31, Changes 2008 2008 Cash 9,943 11,471 1,528 Accounts Receivable 8,910 12,255 (3,346) Inventories 1,185 1,184 +1 Prepaid Expenses 2,937 2,005 +931 Available-for-sale 934 844 90 Securities Property and Equipment 12,013 11,740 +273 Goo

  15. Slide 15: Consolidated Cash Flows

    -14. Consolidated Cash Flows Unit: JPY million Net cash provided by (used in) operating activities Net cash provided by operating activities: JPY 2,018 million 4,083 ¾decrease in accounts receivable of JPY3,328 2,826 million 1,608 2,063 2,018 905 1,444 ¾decrease in prepaid expenses related to on- 33

  16. Slide 16: Other Financial Data (CAPEX etc.)

    -15. Other Financial Data (CAPEX etc.) Unit: JPY million CAPEX 3,953 6,078 2,232 1,831 Adjusted EBITDA 1,546 1,250 1,224 1,242 7,728 9,534 1,058 842 3,101 636 2,316 2,379 2,137 2,044 1,880 1,666 1,739 1,656 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 Depreciation and Amortization 4,228 4,775 1,293

  17. Slide 17: Reference Forecast for FY2008

    -1. Reference Forecast for FY2008 Unit: JPY billion (except for Net Income and Cash Dividend per Share) Recurring revenues continue to increase, Scale up of Systems construction. 34.5 78.5 668.4 11.7 17.5% Operating income continue to increase along with the recurring 1.9 5.2 47.6 0.4 9.3% revenues.

  18. Slide 18: Reference: Medium-term target

    -2. Reference: Medium-term target Over 100 Unit: JPY billion Target 78.5 Forecast 66.8(Result) Expansion the Growth basis by Recurring Revenues Acceleration of the growth speed by Recurring Revenues Total Revenues; Ensuring the increase of Operating Expansion of SI business, Income basis strengthen

  19. Slide 19: Reference: IIJ Group Companies

    -3. Reference: IIJ Group Companies Company Name Ownership Main Business Offers a comprehensive suite of systems integration services from design, IIJ Technology Inc. physical installation, operation, and maintenance to monitoring for our customers' diverse network systems. Provides full outsourcing

  20. Slide 20: Reference: Press Releases

    -4. Reference: Press Releases © 20

  21. Slide 21: Forward-looking Statements

    Forward-looking Statements Statements made in this presentation regarding IIJ’s or management’s 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

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