Internet Initiative Japan Inc. · TSE:3774
Internet Initiative Japan — FY2022 Earnings Presentation
47 slides from Internet Initiative Japan's earnings presentation, May 12, 2023
Slide 1: Consolidated Financial Results for FY22
Consolidated Financial Results for FY22 (April 1, 2022 to March 31, 2023) Internet Initiative Japan Inc. (IIJ) The Prime Market of the Tokyo Stock Exchange (Ticker symbol: 3774) May 12, 2023 Disclaimer Statements made in this presentation regarding IIJ’s or managements’ intentions, beliefs, expectat
Slide 2: Outline
Outline Ⅰ. FY22 Summary and FY23 Outlook P. 2 Ⅱ. FY22 Financial Results P. 3 – 16 Ⅲ. Service & Business Developments etc. P. 17 – 21 Ⅳ. FY23 Financial Targets P. 22 – 23 Ⅴ. Status of Mid-term Plan (FY21-23) P. 24 Ⅵ. FY23 Dividend Forecast P. 25 Appendix P. 26 – 28 【Reference】 Presentation material f
Slide 3: FY22 Summary and FY23 Outlook
+%, YoY = Year over year comparison Ⅰ. FY22 Summary and FY23 Outlook Net Profit is “Profit for the period attributable to owners of the parent” Mobile total subscription (subs) and total number of employees are as of Mar.31. 2023 (FY21 YoY personnel is excluding PTC) FY22 Summary FY23 Outlook Revenu
Slide 4: Consolidated Financial Results
Ⅱ- 1. Consolidated Financial Results Unit: ¥ (JPY) billion YoY = Year over year comparison % of revenue % of revenue % of revenue FY2022 Results FY2021 Results YoY FY2022 Targets YoY (Announced in May 2022) Apr. 2022 - Mar. 2023 Apr. 2021 - Mar. 2022 Apr. 2022 - Mar. 2023 Revenues 252.71 226.34 +11.
Slide 5: Year over Year Analysis
Unit: ¥ (JPY) billion (bn) Ⅱ- 2. Year over Year Analysis GP = Gross Profit YoY = Year over year comparison Revenues FY21 FY22 +26.37 226.34 252.71 • NW services (excl. Mobile) revenues are calculated by deducting the below mentioned Mobile services revenues from total NW services revenues. The reven
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 30.8% 29.1% 26.5% 27.7% 26.5% 26.4% 27.7%
Slide 8: Network (NW) Services (1) Revenues
Unit: ¥ (JPY) million Ⅱ- 5. Network (NW) Services (1) Revenues [ ] , YoY = Year over year comparison QoQ = Quarter over quarter comparison Internet Connectivity (enterprise) Services Total Contracted Bandwidth (Gbps) Revenue recognition of the order-received large scale FY22: ¥40.25 bn, +6.2% YoY
Slide 9: Network (NW) Services (2) Cost of Revenues
Unit: ¥ (JPY) million Ⅱ- 5. Network (NW) Services (2) Cost of Revenues [ ] , YoY = Year over year comparison Circuit-related costs (Internet backbone, WAN lines etc.) FY22 Circuit-related costs increased by 5.7%, +¥1.50 bn YoY, along with an increase in WAN Outsourcing-related costs (mobile infras
Slide 10: Systems Integration (SI) (1) Revenues
Ⅱ- 6. Systems Integration (SI) (1) Revenues Unit: ¥ (JPY) million [ ] , YoY = Year over year comparison Systems Construction revenues (including equipment sales) Systems operation & maintenance revenues for on-premise system Cloud revenues such as private Cloud which are recognized as systems operat
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 facili
Slide 12: Human Capital Disclosure
Ⅱ- 7. Human Capital Disclosure YoY = Year over year comparison Number of Employees (consolidated basis) Breakdown of Employees Age Composition(as of Apr. 2023, IIJ) Contract worker (personnel) （personnel） 0 50 100 Full-time worker (personnel) Admin. 12% 57 Jun. 2021 Sep. 2021 Dec. 2021 Mar. 2022 Jun
Slide 13: SG&A
Ⅱ- 8. SG&A Unit: ¥ (JPY) million [ ] , YoY = Year over year comparison Research & development expenses Commission expenses Others Personnel expenses ( ) % of total revenues FY21: 27,969 [+9.7%] FY22: 30,897 [+10.5%] 7,083 6,707 6,704 7,476 7,858 7,652 7,556 7,833 (13.4%) (12.0%) (11.9%) (12.3%) (13.
Slide 14: Profit
Ⅱ- 9. Profit Unit: ¥ (JPY) million [ ] , YoY = Year over year comparison Operating margin FY22 Operating profit: ¥27.22 bn, +15.6% YoY Operating profit FY22 Profit before tax: ¥27.31 bn, +13.0% YoY Net profit Foreign exchange gain: +¥365 million (FY21: +¥327 million) 12.4% 11.9% 12.0% 12.5% 8.
Slide 15: Consolidated Statements of Financial Position (Summary)
Ⅱ- 10. Consolidated Statements of Financial Position (Summary) Unit: ¥ (JPY) million Mar. 31, 2022 Mar. 31, 2023 Changes Mar. 31, 2022 Mar. 31, 2023 Changes Cash & cash equivalents 47,391 42,472 (4,919) Trade & other payables 20,742 22,313 +1,571 Trade receivables 37,649 41,340 +3,691 Borrowings (cu
Slide 16: Consolidated Cash Flows
Ⅱ- 11. Consolidated Cash Flows Unit: ¥ (JPY) million YoY = Year over year comparison Operating Activities FY22 FY21: 43,573 FY22: 38,529 Major YoY Breakdown Change 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 Profit before tax 27,309 +3,147 13,203 13,857 11,212 11,505 11,215 Depreciation and amortization
Slide 17: Other Financial Data
Ⅱ- 12. Other Financial Data Unit: ¥ (JPY) million CAPEX CAPEX-related depreciation and amortization Cash CAPEX Finance lease FY21: 16,130 FY22: 20,825 FY21: 15,090 FY22： 15,278 6,791 6,581 3,682 3,753 4,009 3,796 3,792 3,789 3,901 4,698 4,593 3,645 3,745 4,172 3,280 4,258 3,094 5,504 3,251 2,285 1,4
Slide 18: Mobile & IoT
Ⅲ- 1. Mobile & 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) FY22 revenue: ¥11.18 bn (+¥0.92 bn YoY) Subscriptions (Subs.) • Same as 4Q21, 4Q22 included approx
Slide 19: Security Business
Ⅲ- 2. Security Business Unit: ¥ (JPY) billion Security service (recurring revenue) largely grew along with continuous Mail Security Web GW strong demands Full outsource of mail system, Full outsource of web Security, URL countermeasures for spam mail etc. filtering etc. IIJ Secure MX Service
Slide 20: Cloud Business
Ⅲ- 3. Cloud Business Unit: ¥ (JPY) billion Private cloud Public cloud Cloud service revenue (recurring) continued to accumulate along with constant Cloud migration IIJ GIO Infrastructure P2 Gen.2 Low-cost servers with pay-as-you-go pricing etc. • Next generation IaaS enabling easy Cloud migrat
Slide 21: Service & Business Developments etc.
Ⅲ- 4. Service & Business Developments etc. Data Centers (DC) Overseas Business Operate 16 DCs in Japan, 2 of which are owned by IIJ (as of Mar. 2023) FY22: Stronger than expected revenue growth Unit: JPY bn Expanding own DC capacity along with growing demands for IIJ services FY23 outlook: R
Slide 22: Large-scale Complex Flagship projects incorporating NW services
Ⅲ- 5. Large-scale Complex Flagship projects incorporating NW services Acquired About the project Project size (approx. ) Main revenue recognition 4Q20 Nationwide NW replacement for a prominent financial institution ¥5 bn, 5 years NW service・SI operation Nationwide WAN connection for all tax offices
Slide 23: FY23 Financial Targets (1)
Ⅳ- 1. FY23 Financial Targets (1) Unit: ¥ (JPY) billion YoY = Year over year comparison % of Revenues % of Revenues % of Revenues FY23 Targets FY22 Results YoY FY23 1H Target YoY (Apr. 2023 - Mar. 2024) (Apr. 2022 - Mar. 2023) (Apr. 2023 - Sep. 2023) Revenues 286.0 252.7 +13.2% +33.29 138.0 +13.1% +1
Slide 24: FY23 Financial Targets (2)
Unit: ¥ (JPY) billion (bn) Ⅳ- 1. FY23 Financial Targets (2) GP = Gross Profit YoY = Year over year comparison Revenues FY22 FY23 Target +33.29 252.71 286.0 • NW services (excl. Mobile) revenues are calculated by deducting the below mentioned Mobile services revenues from total NW services revenues.
Slide 25: Status of Mid-term Plan (FY21-23)
Ⅴ. Status of Mid-term Plan (FY21-23) Unit: ¥ (JPY) billion (bn) +% = Year over year (YoY) comparison Updates of Mid-term Plan Targets FY23 targets Initial target (Announced in First update (Announced in Nov. 2021) Second update (Announced in May 2022) Current target (Announced in May 2023) Stronge
Slide 26: FY23 Dividend Forecast
Ⅵ. FY23 Dividend Forecast 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 Dividend per share： Continued to increase
Slide 27: NTT Docomo's Mobile data interconnectivity charge
Appendix NTT Docomo’s Mobile data interconnectivity charge (Mbps unit charge・monthly) Fiscal FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 Year Future cost method Method Actual cost method MNOs are to disclose the charges for next three years based on their prediction about cost etc. Announced in Mar. 202
Slide 28: Comparison between old & new plans of consumer mobile
Appendix Comparison between the old & new plans of consumer mobile Including tax Old New: GigaPlans (Apr. 2021~) Most up-to-date Price list as of Apr. 1, 2023 With voice ¥858 2Giga Plan With voice ¥850 With voice ¥1,760 2Giga Plan (2GB) (2GB) Minimum Start Plan Data-only ¥748 Data-only ¥740 (3GB) Da
Slide 29: Creation of Guiding Principles for Employees “Backbone of IIJ”
Appendix Creation of Guiding Principles for Employees “Backbone of IIJ” “Backbone of IIJ” was created by volunteer members across departments as a guideline for realizing IIJ's business philosophy and accelerating future growth on the occasion of IIJ’s 30th anniversary. The name “Backbone of IIJ"
Slide 30: Presentation material for company overview
【Reference】 Presentation material for company overview P. 29 – 45 © Internet Initiative Japan Inc. 29
Slide 31: 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 4,451 (approx. 70% engineers) Large Shareholders NTT group 26.9%,
Slide 32: From ISP to Total Network Solution Provider
Business About IIJ From ISP to Total Network Solution Provider 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 33: IIJ as a Total Network Solution Provider
Business About IIJ IIJ as a Total Network Solution Provider Model Growth Strength Strategy Offers various network services and systems integration together in many projects 14,000 customers Approx. (as of Mar. 31, 2023) (Japanese companies, central government agencies, local governments, consumer IS
Slide 34: Management Structure
Business https://www.iij.ad.jp/en/ir/integrated-report/directors/ About IIJ Management Structure Holdings of IIJ shares are as of Mar. 31, 2023 Suzuki’s share includes his wholly owned private company portion Strength Model Growth Strategy Satoshi Murabayashi Koichi Suzuki Executive Vice President
Slide 35: Initiatives for Sustainability
Business About IIJ Initiatives for Sustainability PDF download link for Integrated Report Portal can be here Model https://www.iij.ad.jp/en/ir/integrated-report/archives/pdf/integrated-repot2022_en.pdf Growth Strength Strategy IIJ’s Material Issues Provide an arena for people with diverse Lead netwo
Slide 36: SWOT of IIJ
Business About IIJ SWOT of IIJ Model Growth Strength Strategy Strength Weakness High technological capabilities Business domain mostly in Japan First full-scale ISP in Japan IIJ’s overseas business is mainly global network operation and is to increase Japanese clients’ loyalty Highly skilled
Slide 37: Extensive Service Lineup
Business About IIJ Extensive Service Lineup Model Growth Unit: ¥ (JPY) billion (bn) Strength Strategy FY22 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 38: Monthly Recurring Revenue Accumulation
Business Monthly Recurring Revenue Accumulation About IIJ Model Unit: ¥ (JPY) billion (bn) Growth % = Year over year change Strength Strategy FY23 Revenues FY18 FY19 FY20 FY21 FY22 outlook ATM operation business 192.4 204.5 213.0 226.3 252.7 286.0 Systems construction (+9.2%) (+6.3%) (+4.2%) (+6.3%)
Slide 39: Capex and Business Developments
Business About IIJ Capex and Business Developments Model Growth Unit: ¥ (JPY) billion (bn) Strength Strategy FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 targets Revenues (¥ bn) 157.8 176.2 192.4 204.5 213.0 226.3 252.7 286.0 Stronger demands for enterprise network services Operating 10.4% 10.8% 11.0% 4.
Slide 40: Service & Solution Development Capability
Business About IIJ Service & Solution Development Capability Model Growth Strength Strategy Initiate the market by continuously developing innovative various network-related services & solution in-house © Internet Initiative Japan Inc. 39
Slide 41: Excellent Customer Base
Business About IIJ Excellent Customer Base (Number of IIJ Group’s clients: approximately 14,000 as of March 31, 2023) Model Growth Strength Strategy Through reliable operation, continuous use of Internet connectivity services since the inception of IIJ Our reliable infrastructure operation and c
Slide 42: Competitive Advantages
Business About IIJ Competitive Advantages 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 43: NW Services and SI provided together as a Total Solution
Business About IIJ NW Services and SI provided together as a Total Solution Strength Model Growth 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 44: Mid-term Plan (FY21-FY23)
Business About IIJ Mid-term Plan (FY21-FY23) Model Growth Unit: ¥ (JPY) bn Strength Strategy Previous Mid-term (FY15 - FY20) Current Mid-term (FY21 - FY23) Longer term growth (FY24 - ) Initial mid-term plan target (announced in May 2021) Revenue: ¥270 bn, Operating margin: over 9% Revenue (updated t
Slide 45: Drastically Changing Enterprises Circumstance
Business About IIJ Drastically Changing Enterprises Circumstance Model Growth Strength Strategy Labor shortage require 30yrs Ago Nowadays more IT Japan needs more High Speed/Capacity competitiveness by IT Network Network System CPU/Storage Performance Improve Network convergence System Every CEO say
Slide 46: Market Growth Forecast etc.
Business About IIJ Market Growth Forecast etc. Model Growth Strength Strategy Historical traffic data of major domestic IX Domestic shipments of mainframe and servers Number of units Unit: ten thousand Peak traffic Mainframe Servers (left axis) (right axis) Jun. Sep. Dec. Mar. Jun. Sep. Dec. Mar. Ju
Slide 47: © Internet Initiative Japan Inc.
© Internet Initiative Japan Inc.
Internet Initiative Japan — FY2022 Earnings Presentation on 6ix