Internet Initiative Japan Inc. · TSE:3774

Internet Initiative Japan — FY2010 Earnings Presentation

26 slides from Internet Initiative Japan's earnings presentation, May 13, 2011

  1. Slide 1: FY2010 Consolidated Financial Results

    FY2010 Consolidated Financial Results Internet Initiative Japan Inc. 2011.5.13

  2. Slide 2: Agenda

    Agenda Ⅰ. Summary of FY2010 Financial Results Ⅱ. Consolidated Financial Results for FY2010 Ⅲ. Reference Materials 1

  3. Slide 3: Summary of FY2010 Financial Results

    I. Summary of FY2010 Financial Results < FY2010 Results> <FY2011 Target> ・Revenue JPY82,418 million (up 21.2% YoY) ・Revenue JPY100,000 million (up 21.3% YoY) ・Gross margin JPY16,590 million (up 18.9% YoY) ・Gross margin ・Operating Operating income JPY4,141 million (up 21.4% 21 4% YoY) ・Operating Oper

  4. Slide 4: Consolidated Results for FY2010

    II-1. Consolidated Results for FY2010 Unit: JPY billion % of Revenues % of Revenues % of Revenues FY10 FY09 YoY FY10 Target （10/4～11/3） （09/4～10/3） （10/4～11/3） Total Revenues 82.4 68.0 21.2% 84.5 79.9% 9 9% 79.5% 9 5% Total Costs 65.8 54.1 21.8% ― 20.1% 20.5% Gross Margin 16 6 16.6 14 0 14.0 18.9% ―

  5. Slide 5: Revenues

    II-2. Revenues Unit: JPY million IInternet t t Connectivity C ti it Services S i One-time Systems Construction Recurring Outsourcing Services Revenues Equipment Sales Revenues WAN Services ATM Operation Business Systems Operation and Maintenance FY10: 82,418 FY08: 69,731 FY09: 68,006 (up 21.2% YoY)

  6. Slide 6: Cost of Revenues and Gross Margin Ratio

    II-3. Cost of Revenues and Gross Margin Ratio Unit: JPY million Cost of Revenues Network Services SI Equipment Sales ATM Operation Gross Margin Ratio Business Network Services SI Total Gross Margin Ratio 28.1% 27.8% 26.2% 26.7% 26.2% 25.7% 24.6% 24.7% 23 3% 23.3% 23 4% 23.4% 21.6% 21.4% 21.4% 21.1%

  7. Slide 7: Revenue YoY Change

    Ⅱ-4. Revenue YoY Change Unit: JPY billion (B S (By Service) i ) FY09 FY10 68.0 82.4 ATM Operation Business 0.5 SI revenue was below target - YoY revenue decrease of JPY5 0.2 ATM Operation Business Equipment Sales 0.8 billion from former IIJ-FS 0.8 Equipment q p Sales 29.4 - more smaller SI pprojects

  8. Slide 8: Income YoY Change

    Ⅱ-5. Income YoY Change Unit: JPY billion (G (Gross i ) FY09 Margin) M FY10 SI Gross margin was below target of 14.0 Equipment 16.6 over JPY1 billion. Sales 0.1 - revenue decrease of JPY5 billion Equipment 3.0 from IIJ-FS Sales 0.1 7.0 IIJ-GS - SI revenue fallingg short of target g SI - Initial burde

  9. Slide 9: Network Services (1) Revenues

    II-6. Network Services (1) Revenues Unit: JPY million Internet Connectivity Services for Home Use Internet Connectivity Services for Corporate Use WAN Services Outsourcing Services 702.5 702.0 733.4 647.2 650.4 660.9 619.8 584.7 530 5 530.5 FY10: 51,662 422.1 449.1 476.6 Total Contracted FY08: 35,07

  10. Slide 10: Network Services (2) Cost of Revenues

    II-6. Network Services (2) Cost of Revenues Unit: JPY million Purchasing Costs Personnel Related Costs Others Network Operation Related Costs Outsourcing Costs Circuit Related Costs FY10: 41,678 (Gross Margin: 19.3%) FY09: 30,534 12 402 12,402 12 474 12,474 (Gross Margin: 17.4%) 0 0 616 557 9 156 9,

  11. Slide 11: Systems Integration (1) Revenues

    II-7. Systems Integration (1) Revenues Unit: JPY million (Systems construction) 5,928 S t Systems Construction C t ti Revenues R 5,500 5,297 5,344 Systems Operation and Maintenance Revenues 5,081 4,236 4,428 4,580 3,796 3,844 Order Backlog System construction’s order backlog and order received Order

  12. Slide 12: Systems Integration (2) Cost of Revenues

    II-7. Systems Integration (2) Cost of Revenues Unit: JPY million Purchasing Costs Outsourcing Costs Others FY10: 22,466 Network Operation Related Costs Personnel Related Costs 7 590 7,590 7,152 FY09: 21,904 2,705 3 230 3,230 5,174 5,066 5,017 4,876 4,793 4,702 1,412 972 987 1,235 985 854 1,762 1,657

  13. Slide 13: Number of Employees

    II-8. Number of Employees With the acquisition of IIJ IIJ-GS GS +245 employees (Personnel) Contract worker Full time worker 1,968 1,962 1,944 2,000 1,687 1 740 1,740 267 269 258 [Employee Distribution] 1,602 265 263 1,500 1,373 229 Administration 14% 173 Sales 1,000 20% 1,701 1,693 1,686 Engineers 1

  14. Slide 14: SG&A Expenses/R&D

    II-9. SG&A Expenses/R&D Unit: JPY million Sales and Marketing Expenses S Research R h and dDDevelopment l t General and Administrative Expenses ( ) % of Revenues Unit: JPY million IIJ-GS 2Q10 3Q10 4Q10 FY10 : 12,449 （15.1％） SG&A 224 777 767 FY08 : 10,668 , FY09 : 10,544 , （15.3％） （15.5％） 3,469 3,339

  15. Slide 15: Operating Income and Net Income

    II-10. Operating Income and Net Income Unit: JPY million Operating Income Operating income ： 2,917 Operating income ： 3,412 Operating income ： 4,141 Net Income Attributable to IIJ Net income attributable Net income attributable Net income attributable Operating Margin Ratio to IIJ： 1,419 to IIJ： 2,2

  16. Slide 16: Consolidated Balance Sheets

    II-11. Consolidated Balance Sheets Unit: JPY million March 31, March 31, Changes 2011 2010 Cash and Cash Equivalents 13,314 8,764 +4,549 Increased mainly due to IIJ-GS A Accounts t RReceivable i bl 16 431 16,431 11 397 11,397 +5,035 5 035 Nonmarketable equity securities: JPY1,893 million Inventori

  17. Slide 17: Consolidated Cash Flows

    II-12. Consolidated Cash Flows Unit: JPY million (O (Operating ti Activities) A ti iti ) <FY10 Operating Activities> FY08 : 8,631 FY09 : 9,621 FY10 : 12,564 Increas in operating income Increase in accounts payable: JPY1,995 million 4,177 3,280 3,360 3,279 Decrease in accrued expenses, other curre

  18. Slide 18: Other Financial Data (CAPEX etc.)

    II-13. Other Financial Data (CAPEX etc.) Unit: JPY million CAPEX (Include Capital Lease) FY08 : 7,006 FY09 : 5,584 FY10 : 6,752 IIJ-GS JPY138 million 2,685 Trust Networks JPY344 million 2 212 2,212 1,831 1,832 1,804 1,752 1,489 1,515 1,218 1,221 1,124 658 Adjusted EBITDA FY08 : 8,348 FY09 : 8,718 FY

  19. Slide 19: Cloud Computing Services Developments

    Ⅲ-1. Cloud Computing Services Developments <Great start for Cloud Computing Service> <Cloud related investments> ・Components (customized cloud. Revenue ・1H FY10: approx 1,000 servers recognized in SI operation and maintenance), ・2H FY10: approx 2,000 servers H ti package Hosting k ( (packaged k d cl

  20. Slide 20: IIJ Global Solutions Inc.

    Ⅲ-2. IIJ Global Solutions Inc. <Outline of Acquisition> < IIJ Global Solutions Area of Expertise> ・Acquired mainly the domestic network ・ 1,600 blue-chip corporate clients such as in outsourcing service business such as WAN financial or manufacturing industries from AT&T Japan - For example, closed

  21. Slide 21: ATM Operation Business Developments

    Ⅲ-3. ATM Operation Business Developments < ATM Operation Business Results > < Earthquake Effect > ・FY10 Revenue: JPY0.5 billion, operating loss: ・Placements were stopped during March 2011 JPY0 6 billion JPY0.6 ・Number of dailyy transaction was falling g due to the scheduled blackouts ・Number of ATM

  22. Slide 22: Reference: FY2011 Financial Target

    III-4. Reference: FY2011 Financial Target Unit: JPY billion (Revenue Increase Factors) YoY FY11 Target FY10 Actual Continuous increase from Network Service (Revised FY10 to FY09 （11/4～12/3） （10/4～11/3） Acutal) and SI with revenues from IIJ GIO IIJ GIO Revenue：FY10 approx JPY0.6 billion -> FY11 appr

  23. Slide 23: FY2011 Dividend Forecast

    Ⅲ-5. FY2011 Dividend Forecast Interim Dividend Year-end Dividend JPY3,000 , JPY2,750 JPY 1,500 JPY 1,500 JPY2 250 JPY2,250 JPY2,000 JPY 1,250 JPY1,750 JPY 1,000 , JPY1,500 JPY 1,000 JPY 1,500 JPY 1,500 JPY 1 1,250 250 JPY 1,000 JPY 1,000 JPY 750 2006 2007 2008 2009 2010 2011 22

  24. Slide 24: Reference: IIJ Group Companies

    III-6. Reference: IIJ Group Companies （As of April 31, 2011) Company Name Ownership Main Business Provides a full range of network operation and management services, Net Care, Inc. from customer support, end-user help desks, monitoring and troubleshooting to integrated management services. Provides

  25. Slide 25: Reference: IIJ Press Releases

    III-7. Reference: IIJ Press Releases Date Press Releases IIJ and Digital Garage Form Partnership for Corporate Services and to Build Information-Sharing 01/13 Infrastructure in the Cloud 01/17 IIJ tto Ad Adoptt DNSSEC E Expansion i M Method th d tto IImprove S Security it on DNS Services S i 02/09 I

  26. Slide 26: Forward-looking Statements / Contact Information

    ※ Forward-looking Statements Statements made in this presentation regarding IIJ IIJ’ss or management management’s s intentions, intentions beliefs, beliefs expectations, or predictions for the future are forward-looking statements that are based on IIJ’s and managements’ current expectations, assump

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