Internet Initiative Japan Inc. ("IIJ") (NASDAQ:IIJI) (TSE:3774)
today announced its full year (“FY2017”) and fourth quarter
(“4Q17”) consolidated financial results for the fiscal year ended
March 31, 2018 (from April 1, 2017 to March 31, 2018).1
|
|
Highlights of Financial Results for
FY2017 |
|
|
Revenues Operating Income Income before Income Tax
ExpenseNet Income attributable to IIJ Annual Cash Dividend
|
JPY176.1 billion (up 11.6% YoY)JPY6.8 billion (up 31.7% YoY)JPY7.8
billion (up 44.5% YoY)JPY5.1 billion (up 61.3% YoY)JPY27.00 per
common share |
|
|
Financial Targets for FY2018 |
|
|
RevenuesOperating IncomeAnnual Cash Dividend |
JPY190.0 billion (up 7.9% YoY)JPY7.0 billion (up 3.5% YoY)JPY27.00
per common share |
|
|
Overview of FY2017 Financial Results and Business
Outlook “As a leading comprehensive network service
provider, we continued to expand recurring revenue which
contributed to revenue and operating income growth for FY2017. Year
over year revenue growth of recurring revenue, which amounted to
82.9% of FY2017 total revenue, was 14.0%, especially led by mobile
and security. As for mobile, we accumulated subscription mainly
through our 137 MVNE clients, despite the ongoing competitive
consumer mobile market, as well as accumulation of M2M/IoT type
transactions. Security-related services largely grew by 26.2% year
over year due to overall strong demand and a particularly large
project for a local government. Other recurring revenues such as
Internet connectivity, outsourcing, WAN and systems operation and
maintenance also grew with continuous accumulation of contracts.
Operating income increased year over year mainly because both
network and SI gross margin amount grew and a larger than expected
NTT Docomo’s mobile interconnectivity unit price revision,” said
Eijiro Katsu, COO and President of IIJ.
“As for business developments, we made several
progress by leveraging our business assets: We launched full-MVNO
services and plan to further accumulate enterprise IoT projects
which inquiry number reached over 320 as of March 2018. Such IoT
projects include connected homes business with Chubu Electric
Power, smart factory business with Hirata, a factory production
engineering company to name a few; We decided to build our second
module-based data center near Tokyo to integrate our data center
racks currently spread out in the metropolitan area for more
effective operation; By leveraging IIJ Raptor,2 we established a
new equity method investee, DeCurret, with eighteen prominent
Japanese companies to launch cryptocurrency exchange and settlement
platform business and plan to provide services from the latter half
of FY2018; Almost all major Japanese broadcasting companies joined
our equity method investee, JOCDN, to provide CDN services
best-suited for Japanese Internet contents holders including TVer
and others. Its business has kicked off quite fine and currently
provide highly reliable CDN services to fifteen clients and expect
to expand its customer base. We believe these are critical
successful factors for our middle-to-long term growth,” said
Katsu.
“For FY2018, we plan to continuously accumulate
recurring revenue. As for operating income, we expect the
continuous revenue growth of network, cloud and SI to create the
total operating income growth while forefront fixed cost related to
full-MVNO operations increases,” said Katsu.
“We seek for a significant income growth in FY2019
as the full-MVNO related cost burden should impose much less
negative impact on our income as we accumulate revenue growth. For
the middle term, we believe we shall be even more well positioned
in the coming IoT society by leveraging our full-MVNO operations as
well our strong competitive advantage of having wide range of
service line-ups including cloud and mobile, SI expertise, and
blue-chip customer base,” concluded Koichi Suzuki, Founder, CEO and
Chairman of IIJ.
______________________1 Unless otherwise stated,
all financial figures discussed in this announcement are prepared
in accordance with U.S. GAAP, unaudited and consolidated.2 IIJ
Raptor Service was launched in 2010 and its 13 customers include
Nomura Securities and Sony Bank.
FY2017 Financial Results Summary
Operating Results Summary |
|
FY2016 |
FY2017 |
YoY Change |
|
JPY millions |
JPY millions |
% |
Total revenues |
157,789 |
176,051 |
11.6 |
|
Network services |
92,996 |
108,119 |
16.3 |
|
Systems integration (SI) |
57,749 |
60,431 |
4.6 |
|
Equipment sales |
2,994 |
3,470 |
15.9 |
|
ATM operation business |
4,050 |
4,031 |
(0.5 |
) |
Total costs |
132,542 |
147,818 |
11.5 |
|
Network services |
76,387 |
88,698 |
16.1 |
|
Systems integration (SI) |
50,992 |
53,612 |
5.1 |
|
Equipment sales |
2,735 |
3,142 |
14.9 |
|
ATM operation business |
2,428 |
2,366 |
(2.6 |
) |
Total gross margin |
25,247 |
28,233 |
11.8 |
|
Network services |
16,609 |
19,421 |
16.9 |
|
Systems integration (SI) |
6,756 |
6,819 |
0.9 |
|
Equipment sales |
260 |
328 |
26.6 |
|
ATM operation business |
1,622 |
1,665 |
2.7 |
|
SG&A expenses and R&D |
20,113 |
21,471 |
6.8 |
|
Operating income |
5,134 |
6,762 |
31.7 |
|
Income before income tax expense |
5,427 |
7,840 |
44.5 |
|
Net income attributable to IIJ |
3,167 |
5,109 |
61.3 |
|
|
|
|
|
|
Segment Results Summary |
|
FY2016 |
FY2017 |
|
JPY millions |
JPY millions |
Total revenues |
157,789 |
|
176,051 |
|
Network services and SI business |
154,126 |
|
172,370 |
|
ATM operation business |
4,050 |
|
4,031 |
|
Elimination |
(387 |
) |
(350 |
) |
Operating income |
5,134 |
|
6,762 |
|
Network service and SI business |
3,854 |
|
5,430 |
|
ATM operation business |
1,438 |
|
1,510 |
|
Elimination |
(157 |
) |
(178 |
) |
We have omitted segment analysis because most of
our revenues are dominated by network services and systems
integration (SI) business.
FY2017 Revenues and
IncomeRevenues Total revenues were
JPY176,051 million, up 11.6% YoY (JPY157,789 million for
FY2016).
Network services revenue was JPY108,119 million, up
16.3% YoY (JPY92,996 million for FY2016).
Revenues for Internet connectivity services for
enterprise were JPY27,944 million, up 23.5% YoY from JPY22,634
million for FY2016, mainly due to an increase in mobile-related
services revenues along with an expansion of MVNE business clients’
transactions.
Revenues for Internet connectivity services for
consumers were JPY24,761 million, up 13.9% YoY from JPY21,735
million for FY2016, mainly due to the revenue growth of “IIJmio
Mobile Service,” consumer mobile services which offer inexpensive
data communication and voice services with SIM cards.
Revenues for WAN services were JPY29,295 million,
up 10.7% YoY compared to JPY26,460 million for FY2016, mainly due
to the revenue growth along with order accumulation.
Revenues for Outsourcing services were JPY26,119
million, up 17.8% YoY from JPY22,167 million for FY2016, mainly due
to an increase in security-related services revenues.
Network Services Revenues
Breakdown |
|
FY2016 |
|
FY2017 |
|
YoYChange |
|
JPY
millions |
|
JPY millions |
|
% |
Internet connectivity services (Enterprise) |
22,634 |
|
27,944 |
|
23.5 |
|
IP service* |
9,768 |
|
10,105 |
|
3.4 |
|
IIJ FiberAccess/F and IIJ DSL/F |
3,043 |
|
2,997 |
|
(1.5 |
) |
IIJ Mobile service (Enterprise) |
9,595 |
|
14,619 |
|
52.4 |
|
IIJ Mobile MVNO Platform
Service |
6,441 |
|
10,866 |
|
68.7 |
|
Others |
228 |
|
223 |
|
(2.1 |
) |
Internet connectivity services (Consumer) |
21,735 |
|
24,761 |
|
13.9 |
|
IIJ |
19,634 |
|
23,448 |
|
19.4 |
|
IIJmio Mobile
Service |
17,109 |
|
20,710 |
|
21.0 |
|
hi-ho |
2,101 |
|
1,313 |
|
(37.5 |
) |
WAN services |
26,460 |
|
29,295 |
|
10.7 |
|
Outsourcing services |
22,167 |
|
26,119 |
|
17.8 |
|
Total network services |
92,996 |
|
108,119 |
|
16.3 |
|
* IP service revenues include revenues from the
data center connectivity service.
Number of Contracts and Subscription for
Connectivity Services*1 |
|
as of Mar. 31, 2017 |
|
as ofMar. 31, 2018 |
|
YoY Change |
Internet connectivity services (Enterprise) |
933,496 |
|
1,414,782 |
|
481,286 |
|
IP service (1Gbps-) |
437 |
|
468 |
|
31 |
|
IP service (100Mbps-999Mbps) |
591 |
|
658 |
|
67 |
|
IP service (-99Mbps) |
658 |
|
614 |
|
(44 |
) |
IIJ Data center connectivity service |
253 |
|
241 |
|
(12 |
) |
IIJ FiberAccess/F and IIJ DSL/F |
72,605 |
|
72,630 |
|
25 |
|
IIJ Mobile service (Enterprise) |
857,903 |
|
1,339,586 |
|
481,683 |
|
IIJ Mobile MVNO Platform
Service*2 |
582,250 |
|
824,731 |
|
242,481 |
|
Others |
1,049 |
|
585 |
|
(464 |
) |
Internet connectivity services (Consumer) |
1,409,259 |
|
1,363,531 |
|
(45,728 |
) |
IIJ*2 |
1,275,875 |
|
1,363,531 |
|
87,656 |
|
IIJmio Mobile
Service |
951,249 |
|
1,005,092 |
|
53,843 |
|
hi-ho*2 |
133,384 |
|
- |
|
(133,384 |
) |
Total contracted bandwidth (Gbps)*3 |
2,773.3 |
|
3,117.7 |
|
344.4 |
|
*1. Numbers in the table above show number of contracts except
for “IIJ Mobile service (Enterprise),” “IIJ” and “hi-ho” which show
number of subscriptions.*2. On December 31, 2017, IIJ sold all the
shares of common stock of hi-ho which was IIJ’s wholly owned
subsidiary. Accordingly, hi-ho’s subscription for “Internet
connectivity services (Consumer)” decreased to zero, hi-ho’s mobile
service subscription of 14,735 was reclassed to “IIJ Mobile MVNO
Platform Service” and a part of hi-ho’s subscription other than
mobile service subscription of 47,683 is included in IIJ’s
subscription for “Internet connectivity services (Consumer)” in our
3Q17 (from April 1, 2017 to December 31, 2017) financial
results.*3. Regarding IP service, data center connectivity service
and IIJ FiberAccess/F and IIJ DSL/F of Internet connectivity
services (Enterprise), total contracted bandwidths are calculated
by multiplying number of contracts by contracted bandwidths
respectively.
SI revenues were JPY60,431 million, up 4.6% YoY
(JPY57,749 million for FY2016).
Systems construction revenue, a one-time revenue,
was JPY22,528 million, almost same revenue volume as FY2016 revenue
of JPY22,626 million, mainly due to continuous acquisition of
system construction projects. Systems operation and maintenance
revenue, a recurring revenue, was JPY37,903 million, up 7.9% YoY
(JPY35,123 million for FY2016), mainly due to continued
accumulation of systems operation orders as well as an increase in
private cloud services’ revenues.
Orders received for SI and equipment sales totaled
JPY68,988 million, up 0.6% YoY (JPY68,599 million for FY2016);
orders received for systems construction and equipment sales were
JPY25,810 million, down 3.4% YoY (JPY26,721 million for FY2016) and
orders received for systems operation and maintenance were
JPY43,178 million, up 3.1% YoY (JPY41,877 million for FY2016).
Order backlog for SI and equipment sales as of
March 31, 2018 amounted to JPY46,588 million, up 12.3% YoY
(JPY41,501 million as of March 31, 2017); order backlog for systems
construction and equipment sales was JPY6,991 million, down 2.6%
YoY (JPY7,179 million as of March 31, 2017) and order backlog for
systems operation and maintenance was JPY39,597 million, up 15.4%
YoY (JPY34,322 million as of March 31, 2017).
Equipment sales revenues were JPY3,470 million, up
15.9% YoY (JPY2,994 million for FY2016).
ATM operation business revenues were JPY4,031
million, down 0.5% YoY (JPY4,050 million for FY2016). As of March
31, 2018, 1,096 ATMs have been placed.
Cost and expense Total cost
of revenues was JPY147,818 million, up 11.5% YoY (JPY132,542
million for FY2016).
Cost of network services revenue was JPY88,698
million, up 16.1% YoY (JPY76,387 million for FY2016). There were an
increase in outsourcing-related costs due to our mobile services
and an increase in circuit-related costs along with our WAN
services revenue increase. Regarding NTT Docomo’s interconnectivity
charge for MVNO-related services, the charge based on their FY2016
actual cost was revised in March 2018 and it decreased by 18.2%
year over year. Gross margin was JPY19,421 million, up 16.9% YoY
(JPY16,609 million for FY2016) and gross margin ratio was
18.0%.
Cost of SI revenues was JPY53,612 million, up 5.1%
YoY (JPY50,992 million for FY2016). There was an increase in
outsourcing-related costs along with our SI revenue increase. Gross
margin was JPY6,819 million, up 0.9% YoY (JPY6,756 million for
FY2016) and gross margin ratio was 11.3%.
Cost of equipment sales revenues was JPY3,142 million, up 14.9%
YoY (JPY2,735 million for FY2016). Gross margin was JPY328 million,
up 26.6% YoY (JPY260 million for FY2016) and gross margin ratio was
9.5%.
Cost of ATM operation business revenues was JPY2,366 million,
down 2.6% YoY (JPY2,428 million for FY2016). Gross margin was
JPY1,665 million, up 2.7% YoY (JPY1,622 million for FY2016) and
gross margin ratio was 41.3%.
SG&A and R&D
expenses SG&A and R&D expenses in total were
JPY21,471 million, up 6.8% YoY (JPY20,113 million for FY2016).
Sales and marketing expenses were JPY12,688
million, up 11.0% YoY (JPY11,432 million for FY2016) mainly due to
increases in advertising expenses, personnel-related expenses, and
sales commission expenses.
General and administrative expenses were JPY8,296
million, up 1.0% YoY (JPY8,215 million for FY2016) mainly due to
increases in personnel-related expenses.
Research and development expenses were JPY487
million, up 4.5% YoY (JPY466 million for FY2016).
Operating income Operating
income was JPY6,762 million, up 31.7% YoY (JPY5,134 million for
FY2016).
Other income (expenses) Other
income (expenses) was an income of JPY1,078 million (an income of
JPY293 million for FY2016), mainly because of net gain on sales of
other investments, including available-for-sale securities, of
JPY1,068 million (JPY217 million for FY2016), distribution from
fund investment of JPY270 million (included in other-net of JPY237
million, JPY321 million for FY2016), dividend income of JPY243
million (JPY118 million for FY2016), interest expense of JPY375
million (JPY304 million for FY2016), and foreign exchange losses of
JPY16 million (foreign exchange losses of JPY45 million for
FY2016).
Income before income tax
expenses Income before income tax expenses was
JPY7,840 million, up 44.5% YoY (JPY5,427 million for FY2016).
Net income Income tax expense
was JPY2,696 million (JPY2,225 million for FY2016).
Equity in net income of equity method investees was
JPY135 million (JPY130 million for FY2016) mainly due to net income
of Internet Multifeed Co.
As a result of the above, net income was JPY5,279
million, up 58.4% YoY (JPY3,332 million for FY2016).
Net income attributable to
IIJ Net income attributable to non-controlling
interests was JPY170 million (JPY165 million for FY2016) mainly
related to net income of Trust Networks Inc.
Net income attributable to IIJ was JPY5,109 million, up 61.3%
YoY (JPY3,167 million for FY2016).
FY2017 Balance SheetsBalance
sheetsAs of March 31, 2018, the balance of total assets
was JPY153,449 million, increased by JPY16,054 million from the
balance as of March 31, 2017 of JPY137,395 million.
As of March 31, 2018, the balance of current assets
was JPY67,185 million, increased by JPY3,463 million from the
balance as of March 31, 2017 of JPY63,722 million. The major
breakdown of current assets was: an increase in accounts
receivables by JPY4,447 million to JPY31,831 million, a decrease in
inventories by JPY1,084 million to JPY1,715 million, an increase in
prepaid expenses by JPY832 million to JPY8,443 million and a
decrease in cash and cash equivalents by JPY556 million to
JPY21,403 million. As of March 31, 2018, the balance of noncurrent
assets was JPY86,264 million, increased by JPY12,591 million from
the balance as of March 31, 2017 of JPY73,673 million. The major
breakdown of noncurrent assets was: property and equipment of
JPY46,414 million, increased by JPY6,639 million, including
JPY1,205 million by purchase of land, from the balance as of March
31, 2017, other investments of JPY11,374 million, increased by
JPY3,450 million mainly due to an increase in the fair value of
available-for-sale securities and an increase in prepaid
expenses-noncurrent by JPY1,358 million to JPY7,966 million. Other
investments as of March 31, 2018, consisted of JPY9,288 million in
available-for-sale securities, JPY1,014 million in nonmarketable
equity securities and JPY1,072 million in investments in funds,
including some through a trust. As of March 31, 2018, the balance
of non-amortized intangible assets was JPY6,116 million, decreased
by JPY104 million from the balance as of March 31, 2017 of JPY6,220
million. The major breakdown of non-amortized intangible assets was
JPY6,082 million in goodwill. The balance of amortized intangible
assets, which was customer relationships, was JPY2,671 million,
decreased by JPY365 million from the balance as of March 31, 2017
of JPY3,036 million.
As of March 31, 2018, the balance of current
liabilities was JPY42,145 million, increased by JPY2,162 million
from the balance as of March 31, 2017 of JPY39,983 million. The
major breakdown of current liabilities was: an increase in income
taxes payable by JPY852 million to JPY1,928 million, an increase in
capital lease obligations-current portion by JPY837 million to
JPY5,656 million and a decrease in accounts payable (trade and
other) by JPY563 million to JPY16,399 million. As of March 31,
2018, the balance of noncurrent liabilities was JPY37,315 million,
increased by JPY7,283 million from the balance as of March 31, 2017
of JPY30,032 million. The major breakdown of noncurrent liabilities
was: an increase in long-term borrowings by JPY7,000 million to
JPY15,500 million and an increase in capital lease
obligations-noncurrent by JPY536 million to JPY10,921 million.
As of March 31, 2018, the balance of total IIJ
shareholders’ equity was JPY73,270 million, increased by JPY6,528
million from the balance as of March 31, 2017 of JPY66,742 million
and IIJ shareholders’ equity ratio (total IIJ shareholders’ equity
divided by total assets) as of March 31, 2018 was 47.7%.
FY2017 Cash FlowsCash
flows Cash and cash equivalents as of March 31, 2018
were JPY21,403 million (JPY21,959 million as of March 31,
2017).
Net cash provided by operating activities for
FY2017 was JPY13,262 million (net cash provided by operating
activities of JPY7,368 million for FY2016). There were net income
of JPY5,279 million, depreciation and amortization of JPY12,365
million, and adjustment of net gain on sales of other investments,
which was deducted from proceeds provided by operating activities,
of JPY1,068 million. Regarding changes in operating assets and
liabilities, it was net cash out of JPY3,526 million mainly due to
an increase in accounts receivable along with revenue growth, an
increase in prepaid expenses (including prepaid expense-noncurrent)
in relation to upfront payment for software licenses and
maintenance cost for service facilities.
Net cash used in investing activities for FY2017
was JPY13,037 million (net cash used in investing activities of
JPY7,376 million for FY2016), mainly due to payments for purchase
of property and equipment of JPY15,771 million (JPY10,624 million
for FY2016), including JPY1,205 million for purchase of land,
proceeds from sales of property and equipment, which include sales
and leaseback transactions, of JPY3,306 million (JPY3,046 million
for FY2016), investment in equity method investees, including
DeCurret Inc., of JPY2,005 million (JPY99 million for FY2016) and
proceeds from sales of available-for-sale securities of JPY1,207
million (JPY5 million for FY2016).
Net cash used in financing activities for FY2017
was JPY748 million (net cash provided by financing activities of
JPY2,492 million for FY2016), mainly due to proceeds from long-term
borrowings of JPY7,000 million, principal payments under capital
leases of JPY5,724 million (JPY4,820 million for FY2016), FY2016
year-end and FY2017 interim dividends payments of JPY1,217 million
(JPY1,126 million for FY2016) and payments of long-term accounts
payable of JPY571 million (JPY30 million for FY2016).
FY2018 Financial TargetsOur total revenue and
operating income targets for the fiscal year ending March 31, 2019
are as follows.
(JPY in billions) |
|
Total Revenue |
|
Operating Income |
|
1H FY2018 Target |
90.0 |
|
2.5 |
|
Full FY2018 Target |
190.0 |
|
7.0 |
|
As Japanese economy continues to recover slowly,
Japanese enterprises’ IT-related investment as well as spending
should continue to grow during FY2018. For the mid-to-long term,
market opportunity should expand as mobile-related services growth
along with IoT-related projects and further penetration of cloud
service as well as demand for outsourcing by Japanese enterprises.
For FY2018, with continuous accumulation of network services and SI
projects, we seek to increase revenue and operating income by
expanding gross margin amount.
We target total revenue of JPY190.0 billion, up
7.9% year over year, mainly by continuously accumulating recurring
revenue of network services and systems operation and maintenance.
As for operating income, we target JPY7.0 billion, up 3.5% year
over year. Gross margin growth, mainly by continuous expansion of
network services gross margin as well as SI gross margin ratio
improvement, should absorb forefront fixed cost increase related to
full-MVNO operations.
Due to the revision of the accounting principles
generally accepted in the U.S. (“U.S.GAAP”), fluctuation of
unrealized gains or losses on holding available-for-sale equity
securities will be recognized in other income (expenses) on our
consolidated statements of income from 1Q18* and fluctuations of
stock prices may impact our consolidated statements of income. Due
to difficulties of forecasting such fluctuation, we do not disclose
our FY2018 targets for income before income tax expense, net income
attributable to IIJ, basic net income attributable to IIJ per
share, and consolidated payout ratio of dividends.
*Unrealized gains or losses on holding
available-for-sale equity securities are evaluated based on the
closing price of March 30, 2018, FY2017-end, and are reclassed from
accumulated other comprehensive income to retained earnings at the
beginning of our FY2018. After that, fluctuations of unrealized
gains or losses due to fluctuations of stock prices will be
recognized in other income (expenses) at every quarter.
Consideration on IFRS AdoptionWe are
considering to voluntarily adopt International Financial Reporting
Standards (“IFRS”) from the filing of our FY2018 annual report
“Yuka-shoken-houkokusho.” Under IFRS, we have an alternative to
recognize unrealized gains or losses on holding available-for-sale
equity securities as other comprehensive income.
Because of different accounting principles, our
FY2018 consolidated financial statements disclosed in
“Yuka-shoken-houkokusho” which will be prepared under IFRS might
differ from our FY2018 consolidated financial statements disclosed
in earnings press release as well as in the Convocation Notice for
the 27th Ordinary General Meeting for Shareholders which will be
prepared under the U.S. GAAP.
Planned schedule for voluntary adoption of
IFRS:
- Mid-May 2019: FY2018 unaudited consolidated financial
statements disclosed in earnings press release (U.S.GAAP)
- Late-May 2019: FY2018 audited consolidated financial statements
disclosed in the Convocation Notice for the 27th Ordinary General
Meeting for Shareholders (U.S.GAAP)
- Late-June 2019: FY2018 audited consolidated financial
statements disclosed in annual report “Yuka-shoken-houkokusho”
(IFRS)
FY2018 Dividend ForecastOur FY2018 dividend
forecast is as follows:
|
Interim |
|
Year-end |
|
Full Year |
|
FY2018 Dividend (forecast) |
JPY13.50 (forecast) |
|
JPY13.50 (forecast) |
|
JPY27.00 (forecast) |
|
FY2017 Dividend (scheduled) |
JPY13.50 (paid) |
|
JPY13.50 (scheduled) |
|
JPY27.00 (scheduled) |
|
FY2017 Reconciliation of Non-GAAP Financial
MeasuresThe following table summarizes the reconciliation
of adjusted EBITDA to net income attributable to IIJ in our
consolidated statements of income that are prepared in accordance
with U.S. GAAP.
Adjusted EBITDA |
|
FY2016 |
FY2017 |
|
JPY millions |
JPY millions |
Adjusted EBITDA |
16,109 |
|
19,127 |
|
Depreciation and Amortization |
(10,894 |
) |
(12,365 |
) |
Impairment loss on other intangible assets |
(81 |
) |
- |
|
Operating Income |
5,134 |
|
6,762 |
|
Other Income |
293 |
|
1,078 |
|
Income Tax Expense |
2,225 |
|
2,696 |
|
Equity in Net Income of Equity Method
Investees |
130 |
|
135 |
|
Net income |
3,332 |
|
5,279 |
|
Less: Net income attributable to noncontrolling
interests |
(165 |
) |
(170 |
) |
Net Income attributable to IIJ |
3,167 |
|
5,109 |
|
|
|
|
|
|
CAPEX |
|
FY2016 |
|
FY2017 |
|
|
JPY
millions |
|
JPY millions |
|
CAPEX, including capital leases |
16,531 |
|
20,828 |
|
Acquisition of Assets by Entering into Capital
Leases |
8,302 |
|
7,109 |
|
Purchase of Property and Equipment |
8,229 |
|
13,719 |
|
PresentationPresentation materials
will be posted on our web site (https://www.iij.ad.jp/en/ir/) on
May 15, 2018.
About Internet Initiative Japan
Inc.Founded in 1992, IIJ is one of Japan's leading
Internet-access and comprehensive network solutions providers. IIJ
and its group companies provide total network solutions that mainly
cater to high-end corporate customers. IIJ's services include
high-quality Internet connectivity services, mobile services,
security services, cloud computing services, and systems
integration. Moreover, IIJ operates one of the largest Internet
backbone networks in Japan that is connected to the United States,
the United Kingdom and Asia. IIJ listed on the U.S. NASDAQ Stock
Market in 1999 and on the First Section of the Tokyo Stock Exchange
in 2006.
For inquiries, contact: IIJ
Investor RelationsTel: +81-3-5205-6500 E-mail: ir@iij.ad.jp URL:
https://www.iij.ad.jp/en/ir
Statements made in this press release regarding
IIJ’s or management’s 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 about its business and the industry.
These forward-looking statements, such as statements regarding
revenues and operating and net profitability, are subject to
various risks, uncertainties and other factors that could cause
IIJ’s actual results to differ materially from those contained in
any forward-looking statement. These risks, uncertainties and other
factors include: IIJ’s ability to maintain and increase revenues
from higher-margin services such as outsourcing services; the
possibility that revenues from connectivity services may decline
substantially as a result of competition and other factors; the
ability to compete in a rapidly evolving and competitive
marketplace; the impact on IIJ's profits of fluctuations in costs
such as backbone costs and subcontractor costs; the impact on IIJ's
profits of fluctuations in the price of available-for-sale
securities; fluctuations of equity in net income (loss) of equity
method investees; the impact of technological changes in its
industry; IIJ’s ability to raise additional capital to cover its
indebtedness; the possibility that NTT, IIJ’s largest shareholder,
may decide to exercise substantial influence over IIJ; and other
risks referred to from time to time in IIJ’s filings on Form 20-F
of its annual report and other filings with the United States
Securities and Exchange Commission.
|
Internet Initiative Japan Inc. |
Consolidated Balance Sheets
(Unaudited) |
(As of March 31, 2017 and March 31,
2018) |
|
|
|
|
As of March 31, 2017 |
As of March 31, 2018 |
|
Thousands of JPY |
Thousands of JPY |
ASSETS |
|
|
CURRENT ASSETS: |
|
|
Cash and cash equivalents |
21,958,591 |
|
21,402,892 |
|
Accounts receivable, net of allowance for doubtful accounts of
JPY 107,684 thousand and JPY 123,453 thousand at
March 31, 2017 and March 31, 2018, respectively |
27,383,692 |
|
31,830,882 |
|
Inventories |
2,798,054 |
|
1,714,547 |
|
Prepaid expenses—current |
7,610,925 |
|
8,442,981 |
|
Deferred tax assets—current |
1,298,469 |
|
- |
|
Other current assets, net of allowance for doubtful accounts of
JPY 15,192 thousand and JPY 720 thousand at March 31, 2017
and March 31, 2018, respectively |
2,672,008 |
|
3,793,449 |
|
Total current assets |
63,721,739 |
|
67,184,751 |
|
INVESTMENTS IN EQUITY METHOD INVESTEES |
3,150,175 |
|
5,246,313 |
|
OTHER INVESTMENTS |
7,924,914 |
|
11,374,442 |
|
PROPERTY AND EQUIPMENT, net of accumulated depreciation and
amortization of JPY 50,566,983 thousand and JPY 55,470,955 thousand
at March 31, 2017 and March 31, 2018, respectively |
39,775,444 |
|
46,414,250 |
|
GOODWILL |
6,169,609 |
|
6,082,472 |
|
OTHER INTANGIBLE ASSETS—Net |
3,087,017 |
|
2,704,668 |
|
GUARANTEE DEPOSITS |
3,060,365 |
|
3,422,443 |
|
DEFERRED TAX ASSETS—Noncurrent |
80,566 |
|
183,808 |
|
NET INVESTMENT IN SALES-TYPE LEASES—Noncurrent |
2,047,682 |
|
1,545,293 |
|
Prepaid expenses—Noncurrent |
6,607,437 |
|
7,965,889 |
|
OTHER ASSETS, net of allowance for doubtful accounts of JPY
61,877 thousand and JPY 60,929 thousand at March 31, 2017
and March 31, 2018, respectively |
1,770,201 |
|
1,324,490 |
|
TOTAL |
137,395,149 |
|
153,448,819 |
|
|
|
|
|
|
|
|
As of March 31, 2017 |
As of March 31, 2018 |
|
Thousands of JPY |
Thousands of JPY |
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
CURRENT LIABILITIES: |
|
|
Short-term borrowings |
9,250,000 |
|
9,250,000 |
|
Capital lease obligations—current portion |
4,818,723 |
|
5,655,875 |
|
Accounts payable—trade |
14,653,065 |
|
14,950,920 |
|
Accounts payable—other |
2,308,790 |
|
1,448,423 |
|
Income taxes payable |
1,075,745 |
|
1,928,037 |
|
Accrued expenses |
2,755,581 |
|
3,111,385 |
|
Deferred income—current |
3,750,542 |
|
4,237,676 |
|
Other current liabilities |
1,370,661 |
|
1,562,717 |
|
Total current liabilities |
39,983,107 |
|
42,145,033 |
|
LONG-TERM BORROWINGS |
8,500,000 |
|
15,500,000 |
|
CAPITAL LEASE OBLIGATIONS—Noncurrent |
10,384,643 |
|
10,920,726 |
|
ACCRUED RETIREMENT AND PENSION COSTS—Noncurrent |
3,532,965 |
|
3,724,634 |
|
DEFERRED TAX LIABILITIES—Noncurrent |
963,845 |
|
688,787 |
|
DEFERRED INCOME—Noncurrent |
3,656,612 |
|
3,952,279 |
|
OTHER NONCURRENT LIABILITIES |
2,993,777 |
|
2,528,803 |
|
Total Liabilities |
70,014,949 |
|
79,460,262 |
|
COMMITMENTS AND CONTINGENCIES |
|
|
|
|
|
SHAREHOLDERS' EQUITY: |
|
|
Common-stock—authorized, 75,520,000 shares; issued andoutstanding,
46,711,400 and 46,713,800 shares at March 31, 2017 andMarch 31,
2018, respectively |
25,509,499 |
|
25,511,804 |
|
Additional paid-in capital |
36,117,511 |
|
36,175,937 |
|
Retained earnings |
4,511,945 |
|
8,404,228 |
|
Accumulated other comprehensive income |
2,499,700 |
|
5,074,872 |
|
Treasury stock—1,650,909 shares held by the company at March
31,2017 and March 31, 2018, respectively |
(1,896,784 |
) |
(1,896,784 |
) |
Total Internet Initiative Japan Inc. shareholders' equity |
66,741,871 |
|
73,270,057 |
|
NONCONTROLLING INTERESTS |
638,329 |
|
718,500 |
|
Total equity |
67,380,200 |
|
73,988,557 |
|
TOTAL |
137,395,149 |
|
153,448,819 |
|
|
|
|
|
|
|
|
Internet Initiative Japan Inc. |
Consolidated Statements of Income and
Consolidated Statements of Comprehensive Income
(Unaudited) |
(For the fiscal year ended March 31, 2017 and
March 31, 2018) |
|
|
|
|
|
|
Fiscal Year Ended |
|
Fiscal Year Ended |
|
|
March 31, 2017 |
|
March 31, 2018 |
|
|
Thousands of JPY |
|
Thousands of JPY |
|
REVENUES: |
|
|
|
|
Network services: |
|
|
|
|
Internet connectivity services (enterprise) |
22,633,739 |
|
|
27,943,656 |
|
|
Internet connectivity services (consumer) |
21,734,968 |
|
|
24,761,487 |
|
|
WAN services |
26,459,697 |
|
|
29,295,097 |
|
|
Outsourcing services |
22,167,432 |
|
|
26,118,657 |
|
|
Total |
92,995,836 |
|
|
108,118,897 |
|
|
Systems integration: |
|
|
|
|
Systems construction |
22,625,753 |
|
|
22,527,433 |
|
|
Systems operation and maintenance |
35,122,940 |
|
|
37,903,235 |
|
|
Total |
57,748,693 |
|
|
60,430,668 |
|
|
Equipment sales |
2,994,449 |
|
|
3,470,400 |
|
|
ATM operation business |
4,050,081 |
|
|
4,030,684 |
|
|
Total revenues |
157,789,059 |
|
|
176,050,649 |
|
|
COSTS AND EXPENSES: |
|
|
|
|
Cost of network services |
76,386,849 |
|
|
88,697,639 |
|
|
Cost of systems integration |
50,992,480 |
|
|
53,612,063 |
|
|
Cost of equipment sales |
2,735,169 |
|
|
3,142,262 |
|
|
Cost of ATM operation business |
2,427,870 |
|
|
2,365,403 |
|
|
Total costs |
132,542,368 |
|
|
147,817,367 |
|
|
Sales and marketing |
11,431,467 |
|
|
12,688,046 |
|
|
General and administrative |
8,214,598 |
|
|
8,295,583 |
|
|
Research and development |
466,319 |
|
|
487,451 |
|
|
Total costs and expenses |
152,654,752 |
|
|
169,288,447 |
|
|
OPERATING INCOME |
5,134,307 |
|
|
6,762,202 |
|
|
OTHER INCOME (EXPENSES): |
|
|
|
|
Dividend income |
117,567 |
|
|
242,576 |
|
|
Interest income |
35,259 |
|
|
30,527 |
|
|
Interest expense |
(303,685 |
) |
|
(375,202 |
) |
|
Foreign exchange gain (loss), net |
(45,116 |
) |
|
(15,863 |
) |
|
Net gain on sales of other investments |
216,646 |
|
|
1,068,303 |
|
|
Loss on sales of stocks of an affiliate |
(12,070 |
) |
|
- |
|
|
Impairment of other investments |
(30,554 |
) |
|
(109,840 |
) |
|
Other —net |
314,806 |
|
|
237,420 |
|
|
Other income —net |
292,853 |
|
|
1,077,921 |
|
|
INCOME FROM OPERATIONS BEFORE INCOME TAX EXPENSE AND EQUITY
IN NET INCOME OF EQUITY METHOD INVESTEES |
5,427,160 |
|
|
7,840,123 |
|
|
INCOME TAX EXPENSE |
2,224,880 |
|
|
2,695,839 |
|
|
EQUITY IN NET INCOME OF EQUITY METHOD INVESTEES |
129,791 |
|
|
134,656 |
|
|
NET INCOME |
3,332,071 |
|
|
5,278,940 |
|
|
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING
INTERESTS |
(165,561 |
) |
|
(169,991 |
) |
|
NET INCOME ATTRIBUTABLE TO INTERNET INITIATIVE JAPAN
INC. |
3,166,510 |
|
|
5,108,949 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended |
|
Fiscal Year Ended |
|
|
March 31, 2017 |
|
March 31, 2018 |
|
NET INCOME PER SHARE |
|
|
|
|
BASIC WEIGHTED-AVERAGE NUMBER OF SHARES (shares) |
45,652,981 |
|
|
45,062,878 |
|
|
DILUTED WEIGHTED-AVERAGE NUMBER OF SHARES (shares) |
45,772,470 |
|
|
45,215,686 |
|
|
BASIC WEIGHTED-AVERAGE NUMBER OF ADS EQUIVALENTS (ADSs) |
91,305,962 |
|
|
90,125,756 |
|
|
DILUTED WEIGHTED-AVERAGE NUMBER OF ADS EQUIVALENTS
(ADSs) |
91,544,940 |
|
|
90,431,372 |
|
|
BASIC NET INCOME PER SHARE (JPY) |
69.36 |
|
|
113.37 |
|
|
DILUTED NET INCOME PER SHARE (JPY) |
69.18 |
|
|
112.99 |
|
|
BASIC NET INCOME PER ADS EQUIVALENT (JPY) |
34.68 |
|
|
56.69 |
|
|
DILUTED NET INCOME PER ADS EQUIVALENT (JPY) |
34.59 |
|
|
56.50 |
|
|
|
|
|
|
|
|
Consolidated Statements of Comprehensive Income
(Unaudited) |
|
|
|
|
Fiscal Year Ended |
|
Fiscal Year Ended |
|
|
March 31, 2017 |
|
March 31, 2018 |
|
|
Thousands of JPY |
|
Thousands of JPY |
|
NET INCOME |
3,332,071 |
|
|
5,278,940 |
|
|
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX: |
|
|
|
|
Foreign currency translation adjustments |
(181,110 |
) |
|
(904 |
) |
|
Unrealized holding gain on securities |
1,280,095 |
|
|
2,542,210 |
|
|
Defined benefit pension plans |
204,046 |
|
|
33,866 |
|
|
TOTAL COMPREHENSIVE INCOME |
4,635,102 |
|
|
7,854,112 |
|
|
LESS: COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING
INTERESTS |
(165,561 |
) |
|
(169,991 |
) |
|
COMPREHENSIVE INCOME ATTRIBUTABLE TO INTERNET INITIATIVE
JAPAN INC. |
4,469,541 |
|
|
7,684,121 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Internet Initiative Japan Inc. |
Consolidated Statements of Shareholders'
Equity (Unaudited) |
(For the fiscal year ended March 31, 2017 and
March 31, 2018) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity |
Internet Initiative Japan Inc. shareholders'
equity |
NONCONTROLLINGINTERESTS |
|
Retained earnings (Accumulated deficit) |
Accumulated other comprehensive income (loss) |
|
Shares of common stock outstanding |
|
Common stock |
|
Treasury stock |
Additional paid-in capital |
|
Thousands of JPY |
Thousands of JPY |
Thousands of JPY |
|
Shares |
|
Thousands of JPY |
|
Thousands of JPY |
Thousands of JPY |
Thousands of JPY |
BALANCE, MARCH 31, 2016 |
65,343,975 |
|
2,471,276 |
|
1,196,669 |
|
46,711,400 |
|
25,509,499 |
|
(392,070 |
) |
36,059,833 |
|
498,768 |
|
Dividends paid to noncontrolling interests |
(26,000 |
) |
|
|
|
|
|
|
|
|
|
(26,000 |
) |
Stock-based compensation |
57,678 |
|
|
|
|
|
|
|
|
|
57,678 |
|
|
Net Income |
3,332,071 |
|
3,166,510 |
|
|
|
|
|
|
|
|
|
165,561 |
|
Other Comprehensive income (loss), net of tax |
1,303,031 |
|
|
1,303,031 |
|
|
|
|
|
|
|
|
Dividends paid |
(1,125,841 |
) |
(1,125,841 |
) |
|
|
|
|
|
|
|
|
|
Payments for purchase of treasury stock |
(1,504,714 |
) |
|
|
|
|
|
|
|
(1,504,714 |
) |
|
|
BALANCE, MARCH 31, 2017 |
67,380,200 |
|
4,511,945 |
|
2,499,700 |
|
46,711,400 |
|
25,509,499 |
|
(1,896,784 |
) |
36,117,511 |
|
638,329 |
|
Issuance of common stock upon exercise of stock
options |
2 |
|
|
|
|
2,400 |
|
2,305 |
|
|
(2,303 |
) |
|
Dividends paid to noncontrolling interests |
(46,800 |
) |
|
|
|
|
|
|
|
|
|
(46,800 |
) |
Change in ownership for non-controlling interests and
others |
(39,612 |
) |
|
|
|
|
|
|
|
|
3,408 |
|
(43,020 |
) |
Stock-based compensation |
57,321 |
|
|
|
|
|
|
|
|
|
57,321 |
|
|
Net Income |
5,278,940 |
|
5,108,949 |
|
|
|
|
|
|
|
|
|
169,991 |
|
Other Comprehensive income (loss), net of tax |
2,575,172 |
|
|
2,575,172 |
|
|
|
|
|
|
|
|
Dividends paid |
(1,216,666 |
) |
(1,216,666 |
) |
|
|
|
|
|
|
|
|
|
BALANCE, MARCH 31, 2018 |
73,988,557 |
|
8,404,228 |
|
5,074,872 |
|
46,713,800 |
|
25,511,804 |
|
(1,896,784 |
) |
36,175,937 |
|
718,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Internet Initiative Japan Inc. |
Consolidated Statements of Cash Flows
(Unaudited) |
(For the fiscal year ended March 31, 2017 and
March 31, 2018) |
|
|
|
|
Fiscal Year Ended |
Fiscal Year Ended |
|
March 31, 2017 |
March 31, 2018 |
|
Thousands of JPY |
Thousands of JPY |
OPERATING ACTIVITIES: |
|
|
Net income |
3,332,071 |
|
5,278,940 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
Depreciation and amortization |
10,893,657 |
|
12,364,873 |
|
Impairment loss on other intangible assets |
81,000 |
|
- |
|
Provision for retirement and pension costs, less payments |
252,825 |
|
241,868 |
|
Provision for allowance for doubtful accounts |
68,300 |
|
94,839 |
|
Gain on sales of property and equipment |
(31,809 |
) |
(12,376 |
) |
Loss on disposal of property and equipment |
170,971 |
|
112,329 |
|
Net gain on sales of other investments |
(216,646 |
) |
(1,068,303 |
) |
Loss on sales of stocks of an affiliate |
12,070 |
|
- |
|
Impairment of other investments |
30,554 |
|
113,450 |
|
Foreign exchange loss, net |
18,152 |
|
32,514 |
|
Equity in net income of equity method investees, less dividends
received |
(78,709 |
) |
(83,465 |
) |
Deferred income tax benefit |
(94,343 |
) |
(312,933 |
) |
Other |
(44,667 |
) |
25,856 |
|
Changes in operating assets and liabilities net of effects from
divestitures of a company : |
|
|
Increase in accounts receivable |
(3,751,392 |
) |
(4,823,584 |
) |
Decrease in net investment in sales-type lease — noncurrent |
492,530 |
|
502,389 |
|
Decrease (increase) in inventories |
(800,296 |
) |
1,085,649 |
|
Increase in prepaid expenses |
(2,859,763 |
) |
(842,521 |
) |
Increase in other current and noncurrent assets |
(3,317,968 |
) |
(2,194,591 |
) |
Increase in accounts payable |
827,792 |
|
358,299 |
|
Increase (decrease) in income taxes payable |
(2,621 |
) |
861,899 |
|
Increase (decrease) in accrued expenses |
(167,597 |
) |
351,710 |
|
Increase in deferred income—current |
1,257,870 |
|
487,931 |
|
Increase in deferred income—noncurrent |
604,269 |
|
332,765 |
|
Increase in other current and noncurrent liabilities |
691,442 |
|
354,226 |
|
Net cash provided by operating activities |
7,367,692 |
|
13,261,764 |
|
INVESTING ACTIVITIES: |
|
|
Purchase of property and equipment |
(10,623,993 |
) |
(15,770,587 |
) |
Proceeds from sales of property and equipment |
3,046,189 |
|
3,305,813 |
|
Purchase of other investments |
(410,587 |
) |
(286,695 |
) |
Investment in equity method investees |
(99,000 |
) |
(2,004,808 |
) |
Proceeds from sales of available-for-sale securities |
4,840 |
|
1,206,516 |
|
Proceeds from sales of other investments |
534,549 |
|
157,341 |
|
Payments of guarantee deposits |
(50,345 |
) |
(380,343 |
) |
Refund of guarantee deposits |
92,002 |
|
26,458 |
|
Payments for refundable insurance policies |
(56,476 |
) |
(56,362 |
) |
Proceeds from sale of stock of a subsidiary, net of cash
divested |
- |
|
726,081 |
|
Proceeds from subsidies |
200,000 |
|
48,976 |
|
Other |
(13,000 |
) |
(9,715 |
) |
Net cash used in investing activities |
(7,375,821 |
) |
(13,037,325 |
) |
|
|
|
|
|
|
Fiscal Year Ended |
Fiscal Year Ended |
|
March 31, 2017 |
March 31, 2018 |
|
Thousands of JPY |
Thousands of JPY |
FINANCING ACTIVITIES: |
|
|
Proceeds from short-term borrowings with initial maturities over
three months andlong-term borrowings |
8,550,000 |
|
9,550,000 |
|
Net increase in short-term borrowings with initial maturities less
than three months |
- |
|
(150,000 |
) |
Repayments of short-term borrowings with initial maturities over
three months |
(50,000 |
) |
(2,550,000 |
) |
Principal payments under capital leases |
(4,819,530 |
) |
(5,723,729 |
) |
Proceeds from long-term accounts payable |
1,498,306 |
|
- |
|
Payments of long-term accounts payable |
(30,122 |
) |
(571,373 |
) |
Dividends paid |
(1,125,841 |
) |
(1,216,666 |
) |
Payments for purchase of treasury stock |
(1,504,714 |
) |
- |
|
Other |
(26,000 |
) |
(86,410 |
) |
Net cash provided by (used in) financing activities |
2,492,099 |
|
(748,178 |
) |
|
|
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS |
(94,474 |
) |
(31,960 |
) |
|
|
|
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
2,389,496 |
|
(555,699 |
) |
|
|
|
|
|
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD |
19,569,095 |
|
21,958,591 |
|
CASH AND CASH EQUIVALENTS, END OF THE PERIOD |
21,958,591 |
|
21,402,892 |
|
|
|
|
ADDITIONAL CASH FLOW INFORMATION: |
|
|
Interest paid |
302,035 |
|
368,413 |
|
Income taxes paid |
2,462,106 |
|
2,063,530 |
|
|
|
|
NONCASH INVESTING AND FINANCING ACTIVITIES: |
|
|
Acquisition of assets by entering into capital leases |
8,301,695 |
|
7,108,629 |
|
Facilities purchase liabilities |
2,308,790 |
|
1,448,423 |
|
Asset retirement obligation |
31,980 |
|
49,609 |
|
|
|
|
|
|
|
Fourth Quarter FY2017 Consolidated
Financial Results (3 months)The following tables are
highlight data of fourth Quarter FY2017 (3 months) consolidated
financial results (unaudited, for the three months ended March 31,
2018).
Operating Results Summary |
|
4Q16 |
|
4Q17 |
|
YoY Change |
|
JPY
millions |
|
JPY millions |
|
% |
Total Revenues: |
44,187 |
|
48,439 |
|
9.6 |
|
Network Services |
24,515 |
|
28,119 |
|
14.7 |
|
Systems Integration (SI) |
17,891 |
|
18,130 |
|
1.3 |
|
Equipment Sales |
787 |
|
1,195 |
|
51.9 |
|
ATM Operation Business |
994 |
|
995 |
|
0.0 |
|
Cost of Revenues: |
36,770 |
|
39,961 |
|
8.7 |
|
Network Services |
20,113 |
|
22,588 |
|
12.3 |
|
Systems Integration (SI) |
15,348 |
|
15,715 |
|
2.4 |
|
Equipment Sales |
711 |
|
1,089 |
|
53.2 |
|
ATM Operation Business |
598 |
|
569 |
|
(4.7 |
) |
SG&A Expenses and R&D |
5,438 |
|
5,491 |
|
1.0 |
|
Operating Income |
1,979 |
|
2,987 |
|
50.9 |
|
Income before Income Tax Expense |
1,994 |
|
3,512 |
|
76.1 |
|
Net Income attributable to IIJ |
1,256 |
|
2,421 |
|
92.7 |
|
|
|
|
|
|
|
|
Network Service Revenue Breakdown |
|
4Q16 |
|
4Q17 |
|
YoY Change |
|
JPY
millions |
|
JPY millions |
|
% |
Internet Connectivity Service (Enterprise) |
6,173 |
|
7,526 |
|
21.9 |
|
IP Service*1 |
2,438 |
|
2,552 |
|
4.7 |
|
IIJ FiberAccess/F and IIJ DSL/F |
763 |
|
735 |
|
(3.8 |
) |
IIJ Mobile Service |
2,915 |
|
4,183 |
|
43.5 |
|
IIJ Mobile MVNO Platform Service |
2,083 |
|
3,125 |
|
50.0 |
|
Others |
57 |
|
56 |
|
(0.3 |
) |
Internet Connectivity Service (Consumer) |
5,832 |
|
6,054 |
|
3.8 |
|
IIJ |
5,344 |
|
6,054 |
|
13.3 |
|
IIJmio Mobile Service |
4,672 |
|
5,367 |
|
14.9 |
|
hi-ho*2 |
488 |
|
- |
|
(100.0 |
) |
WAN Services |
6,612 |
|
7,619 |
|
15.2 |
|
Outsourcing Services |
5,899 |
|
6,920 |
|
17.3 |
|
Network Services Revenues |
24,515 |
|
28,119 |
|
14.7 |
|
*1 IP service revenues include revenues from the
data center connectivity service.*2. On December 31, 2017, IIJ sold
all the shares of common stock of hi-ho which was IIJ’s wholly
owned subsidiary. Accordingly, hi-ho’s revenue for “Internet
connectivity services (Consumer)” decreased to zero.
Reconciliation of Non-GAAP Financial
Measures (Fourth Quarter FY2017 (3
months))The following table summarizes the reconciliation
of adjusted EBITDA to net income in our consolidated statements of
income that are prepared in accordance with U.S. GAAP.
Adjusted EBITDA |
|
4Q16 |
4Q17 |
|
JPY millions |
JPY millions |
Adjusted EBITDA |
4,948 |
|
6,196 |
|
Depreciation and Amortization |
(2,888 |
) |
(3,209 |
) |
Impairment loss on other intangible assets |
(81 |
) |
- |
|
Operating Income |
1,979 |
|
2,987 |
|
Other Income (Expense) |
15 |
|
525 |
|
Income Tax Expense (Benefit) |
759 |
|
1,082 |
|
Equity in Net Income of Equity Method
Investees |
61 |
|
33 |
|
Net income |
1,296 |
|
2,463 |
|
Less: Net income attributable to noncontrolling
interests |
(39 |
) |
(42 |
) |
Net Income attributable to IIJ |
1,257 |
|
2,421 |
|
The following table summarizes the
reconciliation of capital expenditures to the purchase of property
and equipment in our consolidated statements of cash flows that are
prepared and presented in accordance with U.S. GAAP.
CAPEX |
|
4Q16 |
4Q17 |
|
JPY millions |
JPY millions |
CAPEX, including capital leases |
4,273 |
5,072 |
Acquisition of Assets by Entering into Capital
Leases |
2,459 |
1,484 |
Purchase of Property and Equipment |
1,814 |
3,588 |
|
|
|
Internet Initiative Japan Inc. |
Quarterly Consolidated Statements of Income
and Quarterly Consolidated Statements of
Comprehensive Income (Unaudited) |
(Three Months ended March 31, 2017 and March
31, 2018) |
|
|
|
|
Three Months Ended |
Three Months Ended |
|
March 31, 2017 |
March 31, 2018 |
|
Thousands of JPY |
Thousands of JPY |
REVENUES: |
|
|
Network services: |
|
|
Internet connectivity services (enterprise) |
6,172,534 |
|
7,525,693 |
|
Internet connectivity services (consumer) |
5,832,016 |
|
6,054,155 |
|
WAN services |
6,611,961 |
|
7,619,194 |
|
Outsourcing services |
5,898,789 |
|
6,920,258 |
|
Total |
24,515,300 |
|
28,119,300 |
|
Systems integration: |
|
|
Systems construction |
8,652,946 |
|
7,996,955 |
|
Systems operation and maintenance |
9,237,719 |
|
10,132,656 |
|
Total |
17,890,665 |
|
18,129,611 |
|
Equipment sales |
786,800 |
|
1,195,037 |
|
ATM operation business |
994,342 |
|
994,727 |
|
Total revenues |
44,187,107 |
|
48,438,675 |
|
COST AND EXPENSES: |
|
|
Cost of network services |
20,113,321 |
|
22,588,521 |
|
Cost of systems integration |
15,348,322 |
|
15,714,175 |
|
Cost of equipment sales |
710,907 |
|
1,088,830 |
|
Cost of ATM operation business |
597,775 |
|
569,491 |
|
Total costs |
36,770,325 |
|
39,961,017 |
|
Sales and marketing |
3,039,453 |
|
3,137,162 |
|
General and administrative |
2,286,433 |
|
2,225,575 |
|
Research and development |
111,908 |
|
128,326 |
|
Total costs and expenses |
42,208,119 |
|
45,452,080 |
|
OPERATING INCOME |
1,978,988 |
|
2,986,595 |
|
OTHER INCOME (EXPENSE): |
|
|
Dividend income |
11,231 |
|
11,792 |
|
Interest income |
8,478 |
|
7,397 |
|
Interest expense |
(85,481 |
) |
(98,828 |
) |
Foreign exchange gain (loss), net |
(22,044 |
) |
(44,394 |
) |
Net gain on sales of other investments |
2,708 |
|
694,804 |
|
Loss on sales of stocks of an affiliate |
(12,070 |
) |
- |
|
Impairment of other investments |
- |
|
(109,840 |
) |
Other—net |
112,320 |
|
64,024 |
|
Other income —net |
15,142 |
|
524,955 |
|
INCOME FROM OPERATIONS BEFORE INCOME TAX EXPENSE AND EQUITY
IN NET INCOME OF EQUITY METHOD INVESTEES |
1,994,130 |
|
3,511,550 |
|
INCOME TAX EXPENSE |
759,028 |
|
1,081,884 |
|
EQUITY IN NET INCOME OF EQUITY METHOD INVESTEES |
60,547 |
|
33,487 |
|
NET INCOME |
1,295,649 |
|
2,463,153 |
|
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING
INTERESTS |
(39,400 |
) |
(42,100 |
) |
NET INCOME ATTRIBUTABLE TO INTERNET INITIATIVE JAPAN
INC. |
1,256,249 |
|
2,421,053 |
|
|
|
|
|
Three Months Ended |
Three Months Ended |
|
March 31, 2017 |
March 31, 2018 |
NET INCOME PER SHARE |
|
|
BASIC WEIGHTED-AVERAGE NUMBER OF SHARES (shares) |
45,652,981 |
|
45,062,891 |
|
DILUTED WEIGHTED-AVERAGE NUMBER OF SHARES (shares) |
45,772,470 |
|
45,227,668 |
|
BASIC WEIGHTED-AVERAGE NUMBER OF ADS EQUIVALENTS (ADSs) |
91,305,962 |
|
90,125,782 |
|
DILUTED WEIGHTED-AVERAGE NUMBER OF ADS EQUIVALENTS
(ADSs) |
91,544,940 |
|
90,455,336 |
|
BASIC NET INCOME PER SHARE (JPY) |
27.52 |
|
53.73 |
|
DILUTED NET INCOME PER SHARE (JPY) |
27.45 |
|
53.53 |
|
BASIC NET INCOME PER ADS EQUIVALENT (JPY) |
13.76 |
|
26.86 |
|
DILUTED NET INCOME PER ADS EQUIVALENT (JPY) |
13.72 |
|
26.77 |
|
|
|
|
|
|
|
Quarterly Consolidated Statements of Comprehensive
Income (Unaudited) |
|
|
Three Months Ended |
Three Months Ended |
|
March 31, 2017 |
March 31, 2018 |
|
Thousands of JPY |
Thousands of JPY |
NET INCOME |
1,295,649 |
|
2,463,153 |
|
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX: |
|
|
Foreign currency translation adjustments |
274,048 |
|
12,497 |
|
Unrealized holding gain on securities |
359,360 |
|
410,023 |
|
Defined benefit pension plans |
193,168 |
|
31,369 |
|
TOTAL COMPREHENSIVE INCOME |
2,122,225 |
|
2,917,042 |
|
LESS: COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING
INTERESTS |
(39,400 |
) |
(42,100 |
) |
COMPREHENSIVE INCOME ATTRIBUTABLE TO INTERNET INITIATIVE
JAPAN INC. |
2,082,825 |
|
2,874,942 |
|
|
|
|
|
|
|
|
|
Internet Initiative Japan Inc. |
Consolidated Statements of Cash Flows
(Unaudited) |
(Three Months ended March 31, 2017 and March
31, 2018) |
|
|
|
|
Three Months Ended |
Three Months Ended |
|
March 31, 2017 |
March 31, 2018 |
|
Thousands of JPY |
Thousands of JPY |
OPERATING ACTIVITIES: |
|
|
Net income |
1,295,649 |
|
2,463,153 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
Depreciation and amortization |
2,887,608 |
|
3,209,013 |
|
Impairment loss on other intangible assets |
81,000 |
|
- |
|
Provision for retirement and pension costs, less payments |
63,902 |
|
45,669 |
|
Provision for allowance for doubtful accounts |
48,311 |
|
26,908 |
|
Loss (gain) on sales of property and equipment |
(16,399 |
) |
1,260 |
|
Loss on disposal of property and equipment |
116,490 |
|
49,938 |
|
Net gain on sales of other investments |
(2,708 |
) |
(694,804 |
) |
Loss on sales of stocks of an affiliate |
12,070 |
|
- |
|
Impairment of other investments |
- |
|
113,450 |
|
Foreign exchange loss, net |
18,429 |
|
43,525 |
|
Equity in net income of equity method investees, less dividends
received |
(60,547 |
) |
(33,487 |
) |
Deferred income tax benefit |
(444,078 |
) |
(289,924 |
) |
Other |
7,049 |
|
71,165 |
|
Changes in operating assets and liabilities net of effects from
divestitures of a company : |
|
|
Increase in accounts receivable |
(3,687,105 |
) |
(4,233,708 |
) |
Decrease in net investment in sales-type lease — noncurrent |
92,140 |
|
130,941 |
|
Decrease in inventories |
786,260 |
|
2,614,446 |
|
Decrease (increase) in prepaid expenses |
(405,326 |
) |
512,885 |
|
Decrease (increase) in other current and noncurrent assets |
1,216,437 |
|
(202,209 |
) |
Increase (decrease) in accounts payable |
667,465 |
|
(540,684 |
) |
Increase in income taxes payable |
764,551 |
|
1,397,103 |
|
Increase (decrease) in accrued expenses |
(186,236 |
) |
110,343 |
|
Increase in deferred income—current |
1,117,832 |
|
67,994 |
|
Increase in deferred income—noncurrent |
302,112 |
|
96,280 |
|
Increase (decrease) in other current and noncurrent
liabilities |
(1,714,893 |
) |
6,504 |
|
Net cash provided by operating activities |
2,960,013 |
|
4,965,761 |
|
INVESTING ACTIVITIES: |
|
|
Purchase of property and equipment |
(2,683,903 |
) |
(3,985,425 |
) |
Proceeds from sales of property and equipment |
827,010 |
|
549,094 |
|
Purchase of other investments |
(94,416 |
) |
(155,577 |
) |
Investment in an equity method investee |
- |
|
(1,830,000 |
) |
Proceeds from sales of available-for-sale securities |
4,840 |
|
746,499 |
|
Proceeds from sales of other investments |
300 |
|
1,075 |
|
Payments of guarantee deposits |
(33,243 |
) |
(82,198 |
) |
Refund of guarantee deposits |
4,298 |
|
5,625 |
|
Payments for refundable insurance policies |
(14,091 |
) |
(14,090 |
) |
Other |
2,000 |
|
(5 |
) |
Net cash used in investing activities |
(1,987,205 |
) |
(4,765,002 |
) |
|
|
|
|
|
|
Three Months Ended |
Three Months Ended |
|
March 31, 2017 |
March 31, 2018 |
|
Thousands of JPY |
Thousands of JPY |
FINANCING ACTIVITIES: |
|
|
Net increase in short-term borrowings with initial maturities less
than three months |
- |
|
(150,000 |
) |
Principal payments under capital leases |
(1,284,643 |
) |
(1,493,754 |
) |
Proceeds from long-term accounts payable |
1,498,306 |
|
- |
|
Payments of long-term accounts payable |
(30,122 |
) |
(165,122 |
) |
Payments for purchase of treasury stock |
(522,607 |
) |
- |
|
Other |
- |
|
11,250 |
|
Net cash used in financing activities |
(339,066 |
) |
(1,797,626 |
) |
|
|
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH
EQUIVALENTS |
58,631 |
|
(44,389 |
) |
|
|
|
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
692,373 |
|
(1,641,256 |
) |
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD |
21,266,218 |
|
23,044,148 |
|
CASH AND CASH EQUIVALENTS, END OF THE PERIOD |
21,958,591 |
|
21,402,892 |
|
|
|
|
Note: The following information is provided to
disclose Internet Initiative Japan Inc. ("IIJ") financial results
(unaudited) for the fiscal year ended March 31, 2018 (“FY2017”) in
the form defined by the Tokyo Stock Exchange.
Consolidated Financial Results for the
Fiscal Year Ended March 31, 2018 [Under accounting principles
generally accepted in the United States ("U.S. GAAP")]
May 15, 2018
Company name: Internet Initiative Japan
Inc.Exchange listed: Tokyo Stock Exchange First SectionStock code
number: 3774URL: https://www.iij.ad.jp/Representative: Eijiro
Katsu, President and Representative DirectorContact: Akihisa Watai,
Managing Director and CFOTEL: (03) 5205-6500Scheduled date for
annual general shareholder’s meeting: June 28, 2018Scheduled date
for dividend payment: June 29, 2018Scheduled date for filing of
annual report (Yuka-shoken-houkokusho) to Japan’s regulatory
organization: June 29, 2018Supplemental material on annual results:
YesPresentation on quarterly report: Yes (for institutional
investors and analysts)
(Amounts of less than JPY one million are
rounded)
1. Consolidated Financial Results for the
Fiscal Year Ended March 31, 2018 (April 1, 2017 to March 31,
2018)
(1) Consolidated Results of Operations |
(% shown is YoY change) |
|
Total revenues |
Operating income |
Income before income tax expense |
Net income attributable to IIJ |
|
JPY
millions |
% |
|
JPY millions |
% |
|
JPY
millions |
% |
|
JPY
millions |
% |
|
Fiscal year ended March 31, 2018 |
176,051 |
11.6 |
|
6,762 |
31.7 |
|
7,840 |
44.5 |
|
5,109 |
61.3 |
|
Fiscal year ended March 31, 2017 |
157,789 |
12.2 |
|
5,134 |
(16.4 |
) |
5,427 |
(12.4 |
) |
3,167 |
(21.6 |
) |
(Note1) |
Total
comprehensive income attributable to IIJFiscal year ended March 31,
2018: JPY7,684 million (up 71.9% YoY)Fiscal year ended March 31,
2017: JPY4,470 million (up 35.6% YoY) |
(Note2) |
Income
before income tax expense represents income from operations before
income tax expense and equity in net income in equity method
investees, respectively, in IIJ's consolidated financial
statements. |
|
Basic net incomeattributable to IIJper share |
|
Diluted net income attributable to IIJper share |
|
Net incomeattributable to IIJto totalshareholders' equity |
|
Income beforeincome taxexpense to totalassets |
|
Total revenuesoperating marginratio |
|
|
JPY |
|
JPY |
|
% |
|
% |
|
% |
|
Fiscal year endedMarch 31, 2018 |
113.37 |
|
112.99 |
|
7.3 |
|
5.4 |
|
3.8 |
|
Fiscal year endedMarch 31, 2017 |
69.36 |
|
69.18 |
|
4.8 |
|
4.3 |
|
3.3 |
|
(Reference) |
Equity in
net income of equity method investeesFiscal year ended March 31,
2018: JPY135 millionFiscal year ended March 31, 2017: JPY130
million |
(2) Consolidated Financial Position |
|
Total assets |
|
Total equity |
|
Total IIJshareholders'equity |
|
Total IIJshareholders'equity to totalassets |
|
Total IIJshareholders’equity per share |
|
|
JPY
millions |
|
JPY
millions |
|
JPY
millions |
|
% |
|
JPY |
|
As of March 31, 2018 |
153,449 |
|
73,989 |
|
73,270 |
|
47.7 |
|
1,625.95 |
|
As of March 31, 2017 |
137,395 |
|
67,380 |
|
66,742 |
|
48.6 |
|
1,481.16 |
|
(3) Consolidated Cash Flow |
|
Operating activities |
|
Investing activities |
Financing activities |
Cash and cashequivalents(end of theperiod) |
|
|
JPY
millions |
|
JPY
millions |
|
JPY
millions |
|
JPY
millions |
|
Fiscal year endedMarch 31, 2018 |
13,262 |
|
(13,037 |
) |
(748 |
) |
21,403 |
|
Fiscal year endedMarch 31, 2017 |
7,368 |
|
(7,376 |
) |
2,492 |
|
21,959 |
|
2. Dividends |
|
Dividend per Shares |
Total cashdividends forthe year |
|
Payout Ratio(consolidated) |
|
Ratio ofDividends
toShareholder'sEquity(consolidated) |
|
1Q-end |
|
2Q-end |
|
3Q-end |
|
Year-end |
|
Total |
|
|
|
|
|
JPY |
|
JPY |
|
JPY |
|
JPY |
|
JPY |
|
JPY
millions |
|
% |
|
% |
|
Fiscal Year Ended March 31, 2017 |
- |
|
13.50 |
|
- |
|
13.50 |
|
27.00 |
|
1,229 |
|
38.9 |
|
1.9 |
|
Fiscal Year Ended March 31, 2018 |
- |
|
13.50 |
|
- |
|
13.50 |
|
27.00 |
|
1,217 |
|
23.8 |
|
1.7 |
|
Fiscal Year Ending March 31, 2019 (forecast) |
- |
|
13.50 |
|
- |
|
13.50 |
|
27.00 |
|
|
|
|
|
|
|
(Note) Change from the latest released dividend
forecasts: No.
3. Target of Consolidated Financial Results
for the Fiscal Year Ending March 31, 2019
(April 1, 2018 through March 31, 2019) |
|
(% shown is YoY change) |
|
Total Revenues |
Operating Income |
|
JPY
millions |
% |
|
JPY
millions |
% |
|
Interim Period EndingSeptember 30, 2018 |
90,000 |
8.4 |
|
2,500 |
8.0 |
|
Fiscal Year EndingMarch 31, 2019 |
190,000 |
7.9 |
|
7,000 |
3.5 |
|
* Notes
- Changes in significant subsidiaries for the fiscal year ended
March 31, 2018 (Changes in significant subsidiaries for the fiscal
year ended March 31, 2018 which resulted in changes in scope of
consolidation): None
- Changes in significant accounting and reporting policies for
the consolidated financial statements
- Changes due to the revision of accounting standards: Yes
In November 2015, the Financial Accounting Standards Board (“FASB”)
issued Accounting Standards Update (“ASU”) 2015-17 “Balance Sheet
Classification of Deferred Taxes.” This ASU requires that deferred
tax assets and liabilities be classified as noncurrent on the
consolidated balance sheet. IIJ adopted this ASU from the first
quarter beginning April 1, 2017, on a prospective basis, and did
not retrospectively adjust the consolidated balance sheet as of
March 31, 2017. As of March 31, 2017, the balance of current
deferred tax assets and liabilities amounted to JPY1,298,469
thousand and JPY108,994 thousand, respectively.
- Others: No
- Number of shares outstanding (shares of common stock)
- The number of shares outstanding (inclusive of treasury
stock): As of March 31, 2018: 46,713,800 shares As of
March 31, 2017: 46,711,400 shares
- The number of treasury stock: As of March 31, 2018:
1,650,909 shares As of March 31, 2017: 1,650,909 shares
- The weighted average number of shares outstanding: For
the fiscal year ended March 31, 2018: 45,062,878 shares For
the fiscal year ended March 31, 2017: 45,652,981 shares
[English Translation]
May 15, 2018
Company name: Internet Initiative Japan Inc.
Company representative: Eijiro Katsu, President
and Representative Director(Stock Code Number: 3774, The First
Section of the Tokyo Stock Exchange)
Contact: Akihisa Watai, Managing Director and
CFOTEL: 81-3-5205-6500
Information Pertaining to Our Largest
Shareholder
1. About Our Largest Shareholder (As of March 31,
2018)
Name |
Relationship |
Its Ownership Percentage (%) |
Securities Exchanges where its Shares are Listed |
Directownership |
Indirectownership |
Total |
NipponTelegraph andTelephoneCorporation(“NTT”) |
IIJ is NTT'saffiliatecompany |
22.4 |
4.5 |
26.9 |
Tokyo Stock Exchange (First Section) |
2. Position of the Listed Company (IIJ) within NTT
Group and other relationships
The ownership percentage by NTT, which is IIJ's
largest shareholder, was 26.9% as of March 31, 2018, including its
indirect ownership. However, IIJ's business activities are not
affected by NTT's ownership in IIJ and IIJ is maintaining its
management independence.
3. Business Relationship with NTT Group
IIJ uses services provided by Nippon Telegraph and
Telephone East Corporation and Nippon Telegraph and Telephone West
Corporation for a significant portion of IIJ’s access circuits,
services provided by NTT Communications Corporation for a
significant portion of IIJ’s domestic and international backbone
circuits, and services provided by NTT DOCOMO, INC for a
significant portion of IIJ’s mobile infrastructure, to provide
Internet connectivity and other services to IIJ’s customers. IIJ
also leases a part of Internet data center facilities from NTT
Group companies to provide Internet data center services. The
aggregate amount paid to for these services was JPY27,545 million
for the fiscal year ended March 31, 2018.
4. Policy Concerning Measures to Protect Minority
Shareholders in Transactions with NTT Group
Business transactions with the NTT Group are within
the scope of normal business practices and there is no special
contract made in relation to the investment by NTT Group.
End
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