Internet Initiative Japan Inc. · TSE:3774

Internet Initiative Japan — H1 FY2015 Earnings Presentation

20 slides from Internet Initiative Japan's earnings presentation, Nov 9, 2015

  1. Slide 1: Consolidated Financial Results for 1H FY2015

    Consolidated Financial Results for 1H FY2015 (First 6 months ended September 30, 2015) Internet Initiative Japan Inc. TSE1(3774), NASDAQ(IIJI) November 9, 2015

  2. Slide 2: Agenda

    Agenda Ⅰ. Summary of 1H FY2015 Financial Results Ⅱ. Consolidated Financial Results for 1H FY2015 Ⅲ. Reference Materials 1

  3. Slide 3: Summary of 1H FY2015 Financial Results

    Ⅰ. Summary of 1H FY2015 Financial Results %: %: YoY YoY change < 1H15 Results > < FY15 Targets > change Revenues JPY65.33 billion up 14.3% JPY139.0 billion up 13.0% Gross margin JPY11.71 billion up 7.4% JPY25.1 billion up 13.7% Operating income JPY2.56 billion up 6.1% JPY6.5 billion up 28.1% Net Inc

  4. Slide 4: Consolidated Financial Results for 1H FY2015

    Ⅱ- 1. Consolidated Financial Results for 1H FY2015 Unit: JPY billion % of Revenues % of Revenues % of Revenues % of Revenues Actual 1H15 1H14 YoY 1H15 Target FY15 Target against Change in % (Apr. 2015 (Apr. 2014 (Apr. 2015 Target (Apr. 2015 -Sep. 2015) -Sep. 2014) -Sep. 2015) -Mar. 2016) Total Reven

  5. Slide 5: Revenues

    Ⅱ- 2. Revenues Network Services Systems Integration (SI) Unit: JPY million Internet Connectivity Services (Enterprise) Systems Construction ( ) , YoY = compared to the same period in a previous year Internet Connectivity Services (Consumer) Systems Operation and Maintenance Outsourcing Service WAN S

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

    Ⅱ- 3. Cost of Revenues and Gross Margin Ratio Cost of revenues: Network Services Systems Integration(SI) Equipment Sales ATM Operation Business Unit: JPY million Gross margin ratio: Network Services Systems Integration(SI) Total Revenues YoY = 1H15 compared to 1H14 1H15 Gross Margin  Total:  JPY11

  7. Slide 7: Network Services: Revenues

    Ⅱ- 4. Network Services (1)Revenues WAN Services Unit: JPY million Outsourcing Services Total Contracted YoY = 1H15 compared to 1H14 Internet Connectivity Services (Consumer) Bandwidth (Gbps) QoQ = 2Q15 compared to 1Q15 Internet Connectivity Services (Enterprise) ( ) = compared to the same period in

  8. Slide 8: Network Services: Cost of Revenues

    Ⅱ- 4. Network Services (2)Cost of Revenues 1H14: 26,369 (21.7%) 1H15: 30,501 (19.7%) Unit: JPY million YoY = 1H15 compared to 1H14 FY14: 54,932 (20.4%) 13,213 13,155 13,762 14,801 14,702 15,799 (21.3%) (22.1%) (21.2%) (17.0%) (20.4%) (19.1%) Others Outsourcing-related costs Personnel-related costs N

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

    Ⅱ- 5. Systems Integration (SI) (1)Revenues < Systems Construction > YoY = compared to the same period a previous year Unit: JPY million Systems Construction Revenues Systems Operation and Maintenance Revenues Order backlog ※Systems construction’s order backlog and Order received order received inclu

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

    Ⅱ- 5. Systems Integration (SI) (2)Cost of Revenues Unit: JPY million 1H14: 17,940 (14.0%) 1H15: 20,341 (14.3%) YoY = 1H15 compared to 1H14 FY14: 41,562 (13.8%) QoQ = 2Q15 compared to 1Q15 8,322 9,618 10,239 13,382 9,591 10,749 (12.0%) (15.7%) (13.0%) (14.2%) (13.4%) (15.0%) Purchasing costs Outsourc

  11. Slide 11: Number of Employees

    Ⅱ- 6. Number of Employees Unit: JPY million (Number of employees) 2,523 2,546 2,818 2,835 2,975 2,981 YoY = 1H15 compared to 1H14 Contract worker Full time worker [Employee Distribution] Administration 11% Sales 18% Engineers 71% 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 Personnel related 4,641 4,643 4,704 5,11

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

    Ⅱ- 7. SG&A Expenses/R&D Unit: JPY million 1H14: 8,488 (14.8%) 1H15: 9,145 (14.0%) YoY = 1H15 compared to 1H14 FY14: 16,997 (13.8%) QoQ = 2Q15 compared to 1Q15 4,229 4,259 4,173 4,336 4,517 4,627 (15.4％) (14.4％) (13.6％) (12.3％) (14.4％) (13.7%) Research & development expenses General & administrative

  13. Slide 13: Operating Income and Net Income

    Ⅱ- 8 Operating Income and Net Income Operating Income Net Income Attributable to IIJ Operating Margin Ratio Unit: JPY million YoY = compared to the same period in a previous year  Operating income:  2Q15: JPY1,422 million (down JPY226 million, down 13.7% YoY) • Temporary positive cost impact of ap

  14. Slide 14: Consolidated Balance Sheets (Summary)

    Ⅱ- 9. Consolidated Balance Sheets (Summary) Unit: JPY million Mar. 31, 2015 Sep. 30, 2015 Changes Cash and Cash Equivalents 21,094 20,098 (995) Accounts Receivable 22,252 20,067 (2,184) Inventories and Prepaid Expenses (Current and Noncurrent) 7,835 10,079 +2,243 Investments in Equity Method Investe

  15. Slide 15: Consolidated Cash Flows

    Ⅱ- 10. Consolidated Cash Flows < Operating Activities > Unit: JPY million YoY = 1H15 compared to 1H14 1H14: 5,345 1H15: 6,080 FY14: 12,912 Operating Activities 1H15 YoY Change Breakdown Net income 1,744 +258 Depreciation and amortization 4,800 +117 Net gain on other non-cash transactions 119 (191) F

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

    Ⅱ- 11. Other Financial Data (CAPEX etc.) < CAPEX > Unit: JPY million Cash CAPEX Capital Lease 1H14: 5,801 1H15: 7,943 FY14: 11,835 Includes approx. JPY2.0 billion cloud-related investment such as for new cloud services and VW series < Depreciation and Amortization > < Adjusted EBITDA > 1H14: 4,684 1

  17. Slide 17: Cloud Business Developments

    Ⅲ-1. Cloud Business Developments Cloud-related revenue (Unit: JPY billion) Breakdown of 2Q15 revenue (Unit: JPY billion) Large game customers 2Q15 cloud-related revenue recognition: General purpose SaaS 0.08 Business enterprise customers 85% in systems operation and maintenance, 15% in outsourcing (

  18. Slide 18: Mobile Business Developments

    Ⅲ-2. Mobile Business Developments Total subscription & revenue IIJmio mobile & IIJ Mobile subscription & revenue Total subscription (thousand) 2Q15-end IIJmio mobile (Consumer) 934 Subscription Total revenue (JPY billion) (unit: thousand) : IIJ Mobile (Enterprise) 1Q15-end 811 Revenue IIJ Mobile (En

  19. Slide 19: FY2015 Financial Target (Remain unchanged)

    Ⅲ-3. FY2015 Financial Target (Remain unchanged) Unit: JPY billion FY15 Target FY14 Actual FY15 Target to (Apr. 2015 - Mar.2016) (Apr. 2014 - Mar.2015) FY14 Actual Total Revenues 139.0 123.1 +15.9 +13.0% Gross Margin 25.1 22.1 +3.0 +13.7% Operating Income 6.5 5.1 +1.4 +28.1% Income before Income Tax

  20. Slide 20: Forward-looking statements / Contact Information

    ※ 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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