Internet Initiative Japan Inc. · TSE:3774

Internet Initiative Japan — Q1 FY2018 Earnings Presentation

21 slides from Internet Initiative Japan's earnings presentation, Aug 8, 2018

  1. Slide 1: Consolidated Financial Results for 1Q FY2018

    Consolidated Financial Results for 1Q FY2018 Internet Initiative Japan Inc. TSE1(3774), NASDAQ(IIJI) August 8, 2018 Internet Initiative Japan Inc.

  2. Slide 2: Agenda

    Agenda Ⅰ. Summary of 1Q18 Financial Results Ⅱ. Consolidated Financial Results for 1Q18 Ⅲ. Reference Materials Internet Initiative Japan Inc. 1

  3. Slide 3: Summary of 1Q18 Financial Results

    (※) Adjusted incomes exclude effect of the Ⅰ. Summary of 1Q18 Financial Results revision of U.S GAAP related to gains/losses on marketable equity securities and funds bn = billion 1Q18 (3 months) Results % ＝Year over year comparison Revenue JPY44.7 bn +9.1% Adjusted EBITDA(*1) JPY4.5 bn +9.1% Gross

  4. Slide 4: Consolidated Financial Results for 1Q FY2018

    Ⅱ - 1. Consolidated Financial Results for 1Q FY2018 Unit: JPY billion % of Revenues % of Revenues % of Revenues % of Revenues 1Q18 Results 1Q17 Results Year over Year Change 1H18 Targets FY18 Targets (Apr. 2018 - Jun. 2018) (Apr. 2017 - Jun. 2017) (Apr. 2018 - Sep. 2018) (Apr. 2018 - Mar. 2019) Tota

  5. Slide 5: Revenues

    Ⅱ - 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

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

    Ⅱ - 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 1Q18: JPY6,783 million (up 3.9% YoY)  Gross margin ratio: 15.2%

  7. Slide 7: Network Services (1) Revenues

    Unit: JPY million Ⅱ - 4. Network Services (1) Revenues [ ] , YoY =Year over year comparison QoQ = 1Q18 compared to 4Q17 WAN Services Outsourcing Services NW Services Revenues Internet Connectivity Services (consumer) Internet Connectivity (Enterprise) Internet Connectivity Services (enterprise)  1

  8. Slide 8: Network Services (2) Cost of Revenues

    Unit: JPY million Ⅱ - 4. Network Services (2) Cost of Revenues [ ] , YoY =Year over year comparison QoQ = 1Q18 compared to 4Q17 Outsourcing-related costs* Others Cost of NW Services Personnel-related costs  1Q18: up 13.2% YoY, up 5.6% QoQ Network operation-related costs • Along with an increase in

  9. Slide 9: Systems Integration (SI) (1) Revenues

    Ⅱ - 5. Systems Integration (SI) (1) Revenues Unit: JPY million [ ] , YoY = Year over year comparison Systems construction Systems operation & maintenance revenues Order backlog (sum of systems construction & equipment sales) revenues Cloud revenues within systems operation & maintenance revenues Ord

  10. Slide 10: Systems Integration (SI) (2) Cost of Revenues

    Ⅱ - 5. Systems Integration (SI) (2) Cost of Revenues Unit: JPY million Purchasing costs [ ] , YoY = Year over year comparison QoQ = 1Q18 compared to 4Q17 Outsourcing-related costs* Others Network operation-related costs Personnel-related costs Cost of SI  1Q18: up JPY195 million, up 1.6% YoY FY17:

  11. Slide 11: Number of Employees

    Ⅱ - 6. Number of Employees Unit: JPY million YoY = Year over year comparison Contract worker Full time worker Employee Distribution Administration 13% Sales 16% Engineers 71%  1Q18: up JPY112 million, up 1.9% YoY  Hired 175 new graduates in Apr. 2018 (148 in Apr. 2017, 137 in Apr. 2016)  FY18 pla

  12. Slide 12: SG&A Expenses/R&D

    Ⅱ - 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 SG&A FY17: 21,471 [+6.8%]  Sales & marketing expenses  1Q18: up 3.0% YoY （13.2%） （12.6%） （11.8%） （11

  13. Slide 13: Operating Income & Net Income

    Ⅱ - 8. Operating Income & Net Income Unit: JPY million [ ] , YoY = Year over year comparison Operating income Adjusted net income attributable to IIJ (*) Operating margin ratio Income  Adjusted income before income tax expense:(*)  1Q18: JPY1,231 million (up 11.4% YoY) FY17 Operating income: 6,762

  14. Slide 14: Gains/Losses on Marketable Equity Securities

    Ⅱ - 9. Gains/Losses on Marketable Equity Securities 4Q17-end B/S 1Q18-beginning B/S 1Q18-end B/S Marketable equity securities*1 Marketable equity securities Marketable equity securities at market value: JPY9.2 billion at market value: JPY9.2 billion at market value: JPY8.3 billion New Accounting Rul

  15. Slide 15: Consolidated Balance Sheets (Summary)

    Ⅱ - 10. Consolidated Balance Sheets (Summary) Unit: JPY million Due to the revision of U.S. GAAP on other investments. Please refer to page 13 of this document for details  Total IIJ Shareholders’ Equity to Total Assets: 47.9% as of Jun. 30, 2018; 47.7% as of Mar. 31, 2018 Internet Initiative Japan

  16. Slide 16: Consolidated Cash Flows

    Ⅱ - 11. Consolidated Cash Flows Unit: JPY million YoY = Year over year comparison Operating Activities FY17: 13,262 Major Breakdown YoY Change Net income 291 (457) Depreciation and amortization 3,297 +317 Fluctuations of operating assets and liabilities 2,094 +2,784 Realized and unrealized loss on o

  17. Slide 17: Other Financial Data

    Ⅱ - 12. Other Financial Data Unit: JPY million [ ] = Year over year comparison CAPEX Depreciation and Amortization Cash CAPEX Capital Lease FY17: 20,828 FY17: 12,365 Adjusted EBITDA Revenue & Adjusted EBITDA Annual Growth Revenue Unit: JPY billion FY17: 19,127 ［+18.7%］ Adjusted EBITDA [+11.6%] [+12.

  18. Slide 18: Cloud Business

    Ⅳ - 1. Cloud Business Unit: JPY billion % = Year over year comparison Cloud-related revenue 1Q18 revenue* FY17: 17.91 [+14.4%] Others 0.10 IIJ Raptor 0.61 Public 0.65 Private 3.47 *From 1Q18, IIJ Raptor revenue (ASP-type FX services) which was formerly included “Task-specific SaaS” is disclose as it

  19. Slide 19: Mobile & IoT Business

    Ⅳ - 2. Mobile & IoT Business % ＝Year over year comparison Subscription (thousand) & revenue (JPY billion) Business developments Total subscription Overall developments Total revenue  1Q18 subscription acquisition pace almost in line with our plan (following the pace of latter half of FY2017)  Str

  20. Slide 20: FY2018 Business Plan

    Ⅳ - 3. FY2018 Business Plan (announced in May 2018) Unit: JPY billion Aim to increase income with continuous recurring revenue growth while full-MVNO-related costs increase, Seek significant income growth in FY19 by strengthening revenue accumulation % of Revenues % of Revenues Target & Assumption F

  21. Slide 21: Forward-looking statements

    ※ Forward-looking statements 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 abou

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