Internet Initiative Japan Inc. · TSE:3774
Internet Initiative Japan — Q1 FY2024 Earnings Presentation
46 slides from Internet Initiative Japan's earnings presentation, Aug 7, 2024
Slide 1: Presentation Material for Consolidated Financial Results for 1Q24
Presentation Material for Consolidated Financial Results for 1Q24 (April 1, 2024 to June 30, 2024) Internet Initiative Japan Inc. (IIJ) The Prime Market of the Tokyo Stock Exchange (Ticker symbol: 3774) August 7, 2024 Disclaimer Statements made in this presentation regarding IIJ’s or managements’ in
Slide 2: Outline
Outline Ⅰ. 1Q24 Summary P. 2 Ⅱ. 1Q24 Financial Results P. 3 ~ 16 Ⅲ. Revision of FY24 Financial Targets and Dividend Forecast P. 17 ~ 18 Ⅳ. Service & Business Developments, etc. P. 19 ~ 21 Appendix P. 22 ~ 26 【Reference】 Presentation material for company overview P. 27 ~ 44 • FY24 stands for a fiscal
Slide 3: 1Q24 Summary
Ⅰ. 1Q24 Summary Unit: JPY/¥ billion (bn), +%, YoY = Year over year comparison Net Profit is “Profit for the period attributable to owners of the parent” Started 1Q with strong revenue growth of both NW Services & SI Business & market situation structurally changing. Continued to acquire large-scale
Slide 4: Consolidated Financial Results
Ⅱ- 1. Consolidated Financial Results Unit: ¥ (JPY) billion YoY = Year over year comparison (Previous (Previous % of revenue % of revenue % of revenue % of revenue target) target) YoY 1H24 YoY FY24 YoY 1Q24 Results 1Q23 Results New targets New targets Apr. 2024 - Jun. 2024 Apr. 2023 - Jun. 2023 Apr.
Slide 5: Year over Year Analysis
Ⅱ- 2. Year over Year Analysis Unit: ¥ (JPY) billion (bn) GP = Gross Profit Revenues 1Q23 1Q24 +10.60 61.42 72.02 Including percentage-of- completion method revenue from FY23-end high order backlog and Each service steadily Strong increase in continuous accumulation of grew consumer and enterprise op
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 28.1% 28.5% 29.4% 28.9% 27.2% 23.0% 23.0%
Slide 8: Network (NW) Services (1) Revenues
Ⅱ- 5. Network (NW) Services (1) Revenues Unit: ¥ (JPY) million [ ] , YoY = Year over year comparison Total Contracted Bandwidth (Gbps) WAN (Wide Area Network) Services Internet Connectivity (enterprise) Services Outsourcing Services 1Q24: ¥11.64 bn, +8.1% YoY Internet Connectivity (consumer) Serv
Slide 9: Network (NW) Services (2) Cost of Revenues
Ⅱ- 5. Network (NW) Services (2) Cost of Revenues Unit: ¥ (JPY) million [ ] , YoY = Year over year comparison, QoQ = Quarter over quarter comparison Circuit-related costs (Internet backbone, WAN lines etc.) 1Q24 Circuit-related costs increased stably Outsourcing-related costs (mobile infrastructure
Slide 10: Systems Integration (SI) (1) Revenues
Unit: ¥ (JPY) million Ⅱ- 6. Systems Integration (SI) (1) Revenues [ ] , YoY = Year over year comparison QoQ = Quarter over quarter comparison MRR = Monthly Recurring Revenue Systems Construction revenues (including equipment sales) Systems operation & maintenance revenues for on-premise system Cloud
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 QoQ = Quarter over quarter comparison Purchasing costs (Equipment etc.) Outsourcing-related costs (SI-related outsourcing personnel costs etc.) Others Network operation-related costs (Depr
Slide 12: Human Capital Disclosure
Ⅱ- 7. Human Capital Disclosure Number of Employees (consolidated basis) Personnel-related costs & expenses (consolidated basis) Contract worker (personnel) Unit: ¥ (JPY) million Full-time worker (personnel) 1Q23 2Q23 3Q23 4Q23 1Q24 Jun. 2023 Sep. 2023 Dec. 2023 Mar. 2024 Jun. 2024 Consolidated 9,358
Slide 13: SG&A, etc.
Ⅱ- 8. SG&A, etc. Unit: ¥ (JPY) million [ ] , YoY = Year over year comparison QoQ = Quarter over quarter comparison Research & development expenses Commission expenses Others (including other income and other expenses) Personnel-related expenses ( ) % of total revenues FY23： 34,837 [+13.5%] [+9.7%] 8
Slide 14: Profit
Unit: ¥ (JPY) million Ⅱ- 9. Profit [ ] , YoY = Year over year comparison Operating profit Operating margin 1Q24: ¥4.48 bn, -10.4% YoY Operating profit Net profit • Profit decreased by approx. ¥1.2 bn due to the VMware impact. The profit level was slightly stronger than initially expected 10.6% 1
Slide 15: Consolidated Statements of Financial Position (Summary)
Ⅱ- 10. Consolidated Statements of Financial Position (Summary) Unit: ¥ (JPY) million Mar. 31, 2024 June 30, 2024 Changes Mar. 31, 2024 June 30, 2024 Changes Cash & cash equivalents 45,474 29,784 (15,690) Trade & other payables 25,435 26,020 +585 Trade receivables 45,683 42,692 (2,991) Borrowings (cu
Slide 16: Consolidated Cash Flows
Ⅱ- 11. Consolidated Cash Flows Unit: ¥ (JPY) million YoY = Year over year comparison Operating Activities 1Q24 Major FY23： 40,780 Breakdown YoY Change 1Q23 2Q23 3Q23 4Q23 1Q24 Profit before tax 5,039 (442) 11,035 11,536 13,193 Depreciation and amortization 7,599 +314 5,016 Changes in operating asset
Slide 17: Other Financial Data
Ⅱ- 12. Other Financial Data Unit: ¥ (JPY) million [ ] , YoY = Year over year comparison CAPEX CAPEX-related depreciation and amortization Cash CAPEX Finance lease FY23：22,521[+8.1%] [+49.1%] FY23：15,634 [+2.3%] [+7.0%] 9,880 3,869 3,878 3,906 3,981 4,139 6,627 6,689 5,288 6,071 3,917 4,340 5,794 3,8
Slide 18: Revision of FY24 Financial Targets and Dividend Forecast
Ⅲ- 1. Revision of FY24 Financial Targets and Dividend Forecast Unit (excluding dividend per share): ¥ (JPY) billion (bn) YoY = Year over year comparison FY24 New targets FY24 Previous targets Background of FY24 Financial Targets revision Revised in August, 2024 Announced in May, 2024 Previously (Ann
Slide 19: FY24 Financial Targets, Year over Year Analysis
Ⅲ- 2. FY24 Financial Targets, Year over Year Analysis Unit: ¥ (JPY) billion Revenues FY23 Result +35.92 FY24 Target 276.08 312.0 • NW services (excl. Mobile) revenues are calculated by deducting the below mentioned Mobile services revenues from total NW services revenues. The revenues include non-mo
Slide 20: Mobile and IoT
Ⅳ- 1. Mobile and 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) 1Q24 revenue: ¥3.53 bn, (+¥0.39 bn YoY) Subscriptions (Subs.) 2,553 1Q24-end subs.: 2,553 thou
Slide 21: Security Business
Ⅳ- 2. Security Business Unit: ¥ (JPY) billion ( ) = Year over year comparison MRR ＝Monthly Recurring Revenue Security service (MRR) largely grew along with continuous strong demands Mail Security Web GW Full outsource of mail system, Full outsource of web security, URL filtering, FY23: 30.93 (+1
Slide 22: Timing of revenue recognition for large-scale complex flagship projects
Ⅳ- 3. Timing of revenue recognition for large-scale complex flagship projects Project size Acquisition Timing of revenue Project overview Main revenue recognition (approx.) periods recognition Foreign exchange trading platform for a prominent financial group ¥3.0 bn, 5 years SI O/M Dec. 2022 To be r
Slide 23: Acquired large-scale Service Integration projects
Appendix Acquired large-scale Service Integration projects Services provided by IIJ SI provided by IIJ Educational Information NW for Chiba city Integrated information system for public safety org. SASE案件(多数) Large-scale SASE project for a global company Internet IIJ GIO Managed Prisma Access UOM
Slide 24: Released DCJPY Network in July 2024
Appendix Released “DCJPY Network” in July 2024 About the Case About DeCurret Issuer of digital DeCurret HLD Shareholder: 35 companies including IIJ GMO Aozora Net Bank, Ltd. currency Shareholder: DeCurret HLD 100% • Digitalization of environmental value transaction (non-fossil Usages of digital Busi
Slide 25: NTT Docomo's Mobile data interconnectivity charge
Appendix NTT Docomo’s Mobile data interconnectivity charge (Mbps Unit charge, monthly) Fiscal Year FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 Method Actual cost method Future cost method: MNOs are to disclose the charges for next three years based on their prediction about cost etc. Announced in M
Slide 26: Comparison between the old & new plans of consumer mobile
Appendix Comparison between the old & new plans of consumer mobile Including tax Old New: GigaPlans (Apr. 2021~) GigaPlans: by data plans As of Jun. 30, 2024 With voice ¥1,760 With voice ¥850 40GB less than 1% Minimum Start Plan 2Giga Plan 30GB less than 1% (3GB) (2GB) Data-only ¥990 Data-only ¥740
Slide 27: Data center (DC)
Appendix Data center (DC) Matsue DCP (opened in Apr. 2011) Shiroi DCC (opened in May 2019) Operate 16 DCs in Japan, 2 of which are owned by IIJ Objective Own service facility (as of Jun. 2024) • First in Japan to use outside-air • Adopt latest energy-saving method Expanding own DC capacity along
Slide 28: Presentation material for company overview
【Reference】 Presentation material for company overview P. 27 ~ 44 © Internet Initiative Japan Inc. 27
Slide 29: 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 5,141 (approx. 70% engineers) Large Shareholders NTT Group, KDDI,
Slide 30: 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 31: 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 15,000 customers Approx. (as of Mar. 31, 2024) (Japanese companies, central government agencies, local governments, consumer IS
Slide 32: Extensive Service Lineups
Business About IIJ Extensive Service Lineups Model Growth Unit: ¥ (JPY) billion (bn) Strength Strategy FY23 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 33: Result of the Previous Mid-term Plan (FY21~FY23)
Result of the Previous Mid-tern Plan (FY21~FY23) Consolidated base “times” are appropriate terms & were calculated by comparing FY23/FY23-end to FY20/FY20-end Subs. = subscription, m = million ICT usage & its advancement by Japanese enterprises finally kicked off, triggered by the Pandemic Realized
Slide 34: New Mid-term Plan (FY24 ~ FY26)
Consolidated base Net Profit is “Profit for the period attributable to owners of the parent” New Mid-term Plan (FY24 ~ FY26) “times” are calculated by comparing FY26/FY26-end to FY23/FY23-end The figures below are all assumed targets Accelerate business scale expansion toward the Mid-to-long Term Vi
Slide 35: New Mid-term Plan's Financial Outlook
New Mid-term Plan’s Financial Outlook Unit: ¥ (JPY) billion Breakdown image of financial outlook Total FY20 FY23 FY26 outlook Gross FY20 FY23 FY26 outlook Operating FY20 FY23 FY26 outlook Revenue (one before (Previous Mid-term (New Mid-term’s Profit (one before (Previous Mid-term (New Mid-term’s Pro
Slide 36: Mid-to-long Term Vision
Mid-to-long Term Vision The figures mentioned below are all assumed status and image Beyond 5,000 Previous Mid-term New Mid-term Mid-to-long Term Vision *5,000 is derived from the Japanese unit of ¥5,000 oku (oku = one hundred million) which is ¥500 bn (FY21-FY23) (FY24-FY26) Total revenue around ¥5
Slide 37: Management Structure (from June 2024)
Business About IIJ Management Structure (from June 2024) Strength Model Growth Strategy Outside independent directors: 5 directors, 42% of the total directors (12 directors) Female officers: 3 officers, 19% of the entire Board (12 directors, 4 Company Auditors) Koichi Suzuki Satoshi Murabayashi
Slide 38: Monthly Recurring Revenue Accumulation
Business About IIJ Monthly Recurring Revenue Accumulation Model Unit: ¥ (JPY) billion (bn) Growth % = Year over year change Strength Strategy FY18 FY19 FY20 FY21 FY22 FY23 Revenues 192.4 204.5 213.0 226.3 252.7 276.1 ATM operation business (+9.2%) (+6.3%) (+4.2%) (+6.3%) (+11.7%) (+9.2%) Systems con
Slide 39: Capex and Business Developments
Business About IIJ Capex and Business Developments Model Unit: ¥ (JPY) billion (bn) Growth Strength Strategy FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 Revenues 157.8 176.2 192.4 204.5 213.0 226.3 252.7 276.1 Stronger demands for enterprise network services 27.8% 27.5% 28.7% NW service gross profit 17.
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: approx. 15,000 as of March 31, 2024) Model Growth Strength Strategy Through reliable operation, continuous use of Internet connectivity services since the inception of IIJ Our reliable infrastructure operation and cross-s
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: Drastically Changing Enterprises Circumstance
Business About IIJ Drastically Changing Enterprises Circumstance Model Growth Strength Strategy Labor shortage require 30 years 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
Slide 45: Market Growth Forecast, etc.
Business About IIJ Market Growth Forecast, etc. Model Growth Strength Strategy Historical traffic data of major domestic IX Operation where IT department spends the most time Top 7 items are shown below Peak traffic Study about replacing of the current systems 72 Responding to in‐house inquries 54 S
Slide 46: © Internet Initiative Japan Inc.
© Internet Initiative Japan Inc.
Internet Initiative Japan — Q1 FY2024 Earnings Presentation on 6ix