TOKYO, Feb. 08, 2023 (GLOBE NEWSWIRE) -- Internet Initiative Japan Inc. (“IIJ”, TSE Prime: 3774) today announced its consolidated financial results for the nine months for the fiscal year ending March 31, 2023 (“1Q-3Q22”, from April 1, 2022 to December 31, 2022) under International Financial Reporting Standards (IFRS).1
| Highlights of Financial Results for 1Q-3Q22 | FY22 Targets | |||||||||
| Total revenues | JPY 185.3 billion | up | 11.9 | % | YoY2 | JPY 250.0 billion | up | 10.5 | % | YoY |
| Operating profit | JPY 18.8 billion | up | 15.3 | % | YoY | JPY 27.2 billion | up | 15.5 | % | YoY |
| Profit before tax | JPY 19.0 billion | up | 8.1 | % | YoY | JPY 26.3 billion | up | 8.8 | % | YoY |
| Net profit3 | JPY 12.9 billion | up | 11.6 | % | YoY | JPY 17.5 billion | up | 11.7 | % | YoY |
Overview of 1Q-3Q22 Financial Results and Business Outlook
“In this nine-month period, we have seen strong revenue growth of 11.9% year over year with consistent penetration of IT utilization among Japanese enterprises and governmental organizations. Continuous accumulation of our network services’ monthly recurring revenues and system integration projects brought this favorable result, and also several large network-replacement transactions we acquired around the last fiscal year-end began to contribute to the revenue from this third quarter. At the same time, we have continuously developed new network services such as “IIJ Cloud Data Platform Service4,” “IIJ Private Backbone Service/Smart HUB5,” “IIJ Secure Access Service6” and “IIJ Mobile Service/TypeD for IIJmio Biz7” to further enhance our recurring revenue business model. In addition, we have recently acquired large scale projects such as several information systems replacement projects from a broadcasting company, a core system construction project for a financial group, a network replacement project with a multi-year contract and a data center construction project in overseas. Those would accelerate our revenue growth further in the next fiscal year and onward,” said Eijiro Katsu, President of IIJ.
“Our outstanding competitive advantage is to provide reliable network and services operation, realized by our robust Internet infrastructure and technology expertise that we have accumulated since our inception. Network would become faster and faster as well as CPU, storage capacity would be tremendously large, and AI would be widely adopted, which may change some current business players’ competitiveness in near future. Even in such a dynamic transition, we believe that our stable and secure network operation capabilities would continue to be required and also become more prominent advantage. Overlooking today’s overall market landscape in Japan, I am very excited that our roles towards future network-society in Japan would become significant more than ever,” concluded Koichi Suzuki, Founder and Chairman of IIJ.
______________________
1 Unless otherwise stated, all financial figures discussed in this announcement are prepared in accordance with IFRS, unaudited and consolidated.
2 YoY is an abbreviation for year over year change.
3 Net profit is “profit for the year attributable to owners of the parent.”
4 For details, please refer to our press release titled “IIJ Launches IIJ Cloud Data Platform Service to Facilitate On-Premise and Multi-Cloud Data Integration” https://www.iij.ad.jp/en/news/pressrelease/2022/1212.html.
5 For details, please refer to our press release titled “Launch IIJ Private Backbone Service/Smart HUB, A New Flexible Cloud Connection Service with High Performance Broadband Over 10Gbps” https://www.iij.ad.jp/en/news/pressrelease/2022/0615-2.html.
6 For details, please refer to our press release titled “IIJ to Start Providing New SASE Service, IIJ Secure Access Service” https://www.iij.ad.jp/en/news/pressrelease/2022/0830.html.
7 For details, please refer to our website https://www.iij.ad.jp/news/pressrelease/2023/0117.html (Japanese text only).
1Q-3Q22 Financial Results Summary
We have omitted segment analysis because most of our revenues are dominated by network services and systems integration (SI) business.
| Operating Results Summary | |||||||
| 1Q-3Q21 | 1Q-3Q22 | YoY Change | |||||
| JPY millions | JPY millions | ％ | |||||
| Total revenues | 165,600 | 185,339 | 11.9 | ||||
| Network services | 95,097 | 102,744 | 8.0 | ||||
| Systems integration (SI) | 68,413 | 80,477 | 17.6 | ||||
| ATM operation business | 2,090 | 2,118 | 1.3 | ||||
| Total costs | (128,816 | ) | (143,683 | ) | 11.5 | ||
| Network services | (68,653 | ) | (74,627 | ) | 8.7 | ||
| Systems integration (SI) | (58,869 | ) | (67,835 | ) | 15.2 | ||
| ATM operation business | (1,294 | ) | (1,221 | ) | (5.6 | ) | |
| Total gross profit | 36,784 | 41,656 | 13.2 | ||||
| Network services | 26,444 | 28,117 | 6.3 | ||||
| Systems integration (SI) | 9,544 | 12,642 | 32.5 | ||||
| ATM operation business | 796 | 897 | 12.7 | ||||
| SG&A, R&D, and other operating income (expenses) | (20,486 | ) | (22,866 | ) | 11.6 | ||
| Operating profit | 16,298 | 18,790 | 15.3 | ||||
| Profit before tax | 17,597 | 19,018 | 8.1 | ||||
| Profit for the period attributable to owners of the parent | 11,522 | 12,854 | 11.6 | ||||
| (Note) Systems integration includes equipment sales. | |||||||
| Segment Results Summary | |||||
| 1Q-3Q21 | 1Q-3Q22 | ||||
| JPY millions | JPY millions | ||||
| Total revenues | 165,600 | 185,339 | |||
| Network services and SI business | 163,606 | 183,300 | |||
| ATM operation business | 2,090 | 2,118 | |||
| Elimination | (96 | ) | (79 | ) | |
| Operating profit | 16,298 | 18,790 | |||
| Network services and SI business | 15,747 | 18,117 | |||
| ATM operation business | 617 | 693 | |||
| Elimination | (66 | ) | (20 | ) | |
1Q-3Q22 Revenues and Income
Revenues
Total revenues were JPY185,339 million, up 11.9% YoY (JPY165,600 million for 1Q-3Q21).
Network services revenues were JPY102,744 million, up 8.0% YoY (JPY95,097 million for 1Q-3Q21).
Revenues for Internet connectivity services for enterprise were JPY29,504 million, up 5.1% YoY from JPY28,082 million for 1Q-3Q21, mainly due to an increase in revenues of IP services and enterprise mobile services, which absorbed a decrease in IIJ Mobile MVNO Platform service (MVNE) revenue in the response to the reduction in procurement cost.
Revenues for Internet connectivity services for consumers were JPY18,335 million, up 3.1% YoY from JPY17,780 million for 1Q-3Q21, mainly due to an increase in revenue of IIJmio Mobile services led by an increase in subscription, which absorbed a decrease in revenue resulted from a decrease in average revenue per user along with continued migration of old plan’s customers to “GigaPlans”, which launched at the beginning of the previous fiscal year.
Revenues for Outsourcing services were JPY34,359 million, up 15.2% YoY from JPY29,831 million for 1Q-3Q21, mainly due to an increase in security-related services revenues.
Revenues for WAN services were JPY20,546 million, up 5.9% YoY from JPY19,404 million for 1Q-3Q21.
| Network Services Revenues Breakdown | |||||||
| 1Q-3Q21 | 1Q-3Q22 | YoY Change | |||||
| JPY millions | JPY millions | ％ | |||||
| Total network services | 95,097 | 102,744 | 8.0 | ||||
| Internet connectivity services (enterprise) | 28,082 | 29,504 | 5.1 | ||||
| IP services (including data center connectivity services) | 10,069 | 10,862 | 7.9 | ||||
| IIJ Mobile Services | 15,132 | 15,548 | 2.7 | ||||
| Enterprise mobile services (IoT usages etc.) | 7,516 | 8,149 | 8.4 | ||||
| IIJ Mobile MVNO Platform Service (MVNE) | 7,616 | 7,399 | (2.8 | ) | |||
| Others | 2,881 | 3,094 | 7.4 | ||||
| Internet connectivity services (consumer) | 17,780 | 18,335 | 3.1 | ||||
| IIJmio Mobile Services | 15,555 | 15,941 | 2.5 | ||||
| Others | 2,225 | 2,394 | 7.6 | ||||
| Outsourcing services | 29,831 | 34,359 | 15.2 | ||||
| WAN services | 19,404 | 20,546 | 5.9 | ||||
| Number of Contracts and Subscription for Connectivity Services (Note 1) | |||||||
| As of Dec. 31, 2021 | As of Dec. 31, 2022 | YoY Change | |||||
| Internet connectivity services (enterprise) | 2,394,237 | 2,867,238 | 473,001 | ||||
| IP service (greater than or equal to 1Gbps) (Note2) | 751 | 1,341 | 590 | ||||
| IP service (less than 1Gbps) (Note2) | 1,206 | 1,334 | 128 | ||||
| IIJ Mobile Services | 2,302,538 | 2,771,263 | 468,725 | ||||
| Enterprise mobile services (IoT usages etc.) | 1,319,918 | 1,685,333 | 365,415 | ||||
| IIJ Mobile MVNO Platform Service (MVNE) | 982,620 | 1,085,930 | 103,310 | ||||
| Others | 89,742 | 93,300 | 3,558 | ||||
| Internet connectivity services (consumer) | 1,419,277 | 1,538,622 | 119,345 | ||||
| IIJmio Mobile Services | 1,072,920 | 1,196,683 | 123,763 | ||||
| Others | 346,357 | 341,939 | (4,418 | ) | |||
| Total contracted bandwidth (Gbps) (Note 3) | 7,346.5 | 8,727.3 | 1,380.8 | ||||
| (Notes) | |||||||
| 1. | Numbers in the table above show number of contracts except for “IIJ Mobile Services (enterprise)” and “IIJmio Mobile Services” which show number of subscriptions. | ||||||
| 2. | The numbers of IP service contracts include the numbers of IIJ data center connectivity service contracts. The number of IP services (greater than or equal to 1Gbps) contracts as of December 31, 2022 increased mainly due to Tokyo public high school project in 3Q22. | ||||||
| 3. | Total contracted bandwidth is calculated by multiplying number of contracts under “Internet connectivity services (enterprise)” except for “IIJ Mobile Services” and the contracted bandwidths of the services respectively. Total contracted bandwidth as of December 31, 2022 increased mainly due to Tokyo public high school project in 3Q22. | ||||||
SI revenues, including equipment sales, were JPY80,477 million, up 17.6% YoY (JPY68,413 million for 1Q-3Q21).
Systems construction and equipment sales, a one-time revenue, was JPY29,936 million, up 22.6% YoY (JPY24,415 million for 1Q-3Q21). Systems operation and maintenance revenue, a recurring revenue, was JPY50,541 million, up 14.9% YoY (JPY43,998 million for 1Q-3Q21), mainly due to continued accumulation of systems operation orders as well as an increase in cloud-related services’ revenues.
Orders received for SI, including equipment sales, totaled JPY91,971 million, up 31.6% YoY (JPY69,910 million for 1Q-3Q21); orders received for systems construction and equipment sales were JPY34,190 million, up 29.0% YoY (JPY26,501 million for 1Q-3Q21), and orders received for systems operation and maintenance were JPY57,781 million, up 33.1% YoY (JPY43,409 million for 1Q-3Q21).
Order backlog for SI, including equipment sales, as of December 31, 2022 amounted to JPY84,285 million, up 23.7% YoY (JPY68,151 million as of December 31, 2021); order backlog for systems construction and equipment sales was JPY16,705 million, up 48.4% YoY (JPY11,254 million as of December 31, 2021) and order backlog for systems operation and maintenance was JPY67,580 million, up 18.8% YoY (JPY56,897 million as of December 31, 2021).
ATM operation business revenues were JPY2,118 million, up 1.3% YoY (JPY2,090 million for 1Q-3Q21).
Cost of sales
Total cost of sales was JPY143,683 million, up 11.5% YoY (JPY128,816 million for 1Q-3Q21).
Cost of network services revenue was JPY74,627 million, up 8.7% YoY (JPY68,653 million for 1Q-3Q21). There were an increase in purchasing cost of mobile devices and one-time cost reimbursement, which was related to a mobile unit charge by NTT DOCOMO, INC., of over JPY0.5 billion in 3Q22 (a similar impact of approximately JPY1.08 billion in 3Q21) as FY2021 mobile unit charge was fixed based on its actual results for the corresponding period. Gross profit was JPY28,117 million, up 6.3% YoY (JPY26,444 million for 1Q-3Q21), and gross profit ratio was 27.4% (27.8% for 1Q-3Q21).
Cost of SI revenues, including equipment sales was JPY67,835 million, up 15.2% YoY (JPY58,869 million for 1Q-3Q21), mainly due to increases in purchasing costs and multi-cloud related services’ license fees along with an increase in revenues. Gross profit was JPY12,642 million, up 32.5% YoY (JPY9,544 million for 1Q-3Q21) and gross profit ratio was 15.7% (13.9% for 1Q-3Q21).
Cost of ATM operation business revenues was JPY1,221 million, down 5.6% YoY (JPY1,294 million for 1Q-3Q21). Gross profit was JPY897 million (JPY796 million for 1Q-3Q21) and gross profit ratio was 42.4% (38.1% for 1Q-3Q21).
Selling, general and administrative expenses and other operating income and expenses
Selling, general and administrative expenses, including research and development expenses, totaled JPY23,064 million, up 12.5% YoY (JPY20,494 million for 1Q-3Q21), mainly due to increases in personnel-related expenses, advertising expenses and outsourcing expenses.
Other operating income was JPY246 million (JPY125 million for 1Q-3Q21).
Other operating expenses was JPY48 million (JPY117 million for 1Q-3Q21).
Operating profit
Operating profit was JPY18,790 million (JPY16,298 million for 1Q-3Q21), up 15.3% YoY.
Finance income and expenses, and share of profit (loss) of investments accounted for using equity method
Finance income was JPY802 million (JPY2,756 million for 1Q-3Q21). It included gains on financial instruments, mainly related to funds, of JPY376 million (JPY2,560 million for 1Q-3Q21) and foreign exchange gain of JPY323 million (JPY98 million for 1Q-3Q21).
Finance expense was JPY413 million (JPY401 million for 1Q-3Q21). It included interest expenses of JPY400 million (JPY401 million for 1Q-3Q21).
Share of loss of investments accounted for using equity method was JPY161 million (loss of JPY1,056 million for 1Q-3Q21). There was a loss of DeCurret Holdings, Inc. of JPY274 million (JPY1,332 million for 1Q-3Q21).
Profit before tax
Profit before tax was JPY19,018 million (JPY17,597 million for 1Q-3Q21), up 8.1% YoY.
Profit for the period
Income tax expense was JPY6,049 million (JPY5,974 million for 1Q-3Q21). As a result, profit for the period was JPY12,969 million (JPY11,623 million for 1Q-3Q21), up 11.6% YoY.
Profit for the period attributable to non-controlling interests was JPY115 million (JPY101 million for 1Q-3Q21), mainly related to net income of Trust Networks Inc.
Profit for the period attributable to owners of the parent was JPY12,854 million (JPY11,522 million for 1Q-3Q21), up 11.6% YoY.
Financial Position as of December 31, 2022
As of December 31, 2022, the balance of total assets was JPY234,858 million, increased by JPY3,053 million from the balance as of March 31, 2022 of JPY231,805 million.
As of December 31, 2022, the balance of current assets was JPY103,148 million, decreased by JPY1,337 million from the balance as of March 31, 2022 of JPY104,485 million. As for the major breakdown of balance and fluctuation of current assets, cash and cash equivalents decreased by JPY6,064 million to JPY41,327 million, trade receivables decreased by JPY1,570 million to JPY36,079 million, inventories increased by JPY1,682 million to JPY4,290 million, prepaid expenses increased by JPY2,354 million to JPY15,907 million, and contract assets increased by JPY1,448 million to JPY3,318 million.
As of December 31, 2022, the balance of non-current assets was JPY131,710 million, increased by JPY4,390 million from the balance as of March 31, 2022 of JPY127,320 million. As for the major breakdown of balance and fluctuation of non-current assets, tangible assets increased by JPY5,056 million to JPY22,902 million mainly due to purchases related to Shiroi Data Center Campus construction, right-of-use assets, which include right to use leased assets under operating lease contracts such as office and data centers and assets under finance lease contracts such as data communication equipment, decreased by JPY2,376 million to JPY42,498 million mainly due to depreciation, intangible assets decreased by JPY224 million to JPY16,200 million mainly due to amortization of software, and prepaid expenses increased by JPY1,398 million to JPY11,850 million, mainly due to operation and maintenance costs.
As of December 31, 2022, the balance of current liabilities was JPY74,102 million, decreased by JPY2,675 million from the balance as of March 31, 2022 of JPY76,777 million. As for the major breakdown of balance and fluctuation of current liabilities, trade and other payables increased by JPY3,077 million to JPY23,819 million, borrowings increased by JPY400 million to JPY16,770 million mainly due to a decrease of JPY1,500 million from repayment of long-term borrowings and an increase of JPY2,000 million owing to a transfer from non-current liabilities, income taxes payable decreased by JPY3,817 million to JPY1,978 million, contract liabilities increased by JPY187 million to JPY9,758 million and other financial liabilities decreased by JPY1,260 million to JPY15,775 million.
As of December 31, 2022, the balance of non-current liabilities was JPY47,591 million, decreased by JPY2,816 million from the balance as of March 31, 2022 of JPY50,407 million. As for the major breakdown of balance and fluctuation of non-current liabilities, long-term borrowings decreased by JPY1,829 million to JPY3,671 million mainly due to a transfer to current portion, contract liabilities decreased by JPY503 million to JPY6,926 million and other financial liabilities decreased by JPY472 million to JPY29,674 million.
As of December 31, 2022, the balance of total equity attributable to owners of the parent was JPY112,006 million, increased by JPY8,478 million from the balance as of March 31, 2022 of JPY103,528 million. Ratio of owners' equity to total assets was 47.7% as of December 31, 2022.
1Q-3Q22 Cash Flows
Cash and cash equivalents as of December 31, 2022 were JPY41,327 million (JPY40,960 million as of December 31, 2021).
Net cash provided by operating activities for 1Q-3Q22 was JPY27,314 million (net cash provided by operating activities of JPY30,370 million for 1Q-3Q21). There were profit before tax of JPY19,018 million (JPY17,597 million for 1Q-3Q21), depreciation and amortization of JPY21,254 million (JPY21,088 million for 1Q-3Q21), including JPY8,460 million (JPY8,643 million for 1Q-3Q21) of depreciation of right-of-use operating lease assets under IFRS 16, and income taxes paid of JPY9,871 million (JPY5,680 million for 1Q-3Q21). Regarding changes in working capital, there was net cash out of JPY2,991 million (net cash out of JPY1,298 million for 1Q-3Q21). As for the major factors for the increase in net cash out in comparison with 1Q-3Q21, there were a decrease in proceeds from trade receivables and increases in payments of prepaid expenses and inventories, which exceeded a decrease in payments of trade and other payables.
Net cash used in investing activities for 1Q-3Q22 was JPY13,160 million (net cash used in investing activities of JPY9,832 million for 1Q-3Q21), mainly due to payments for purchases of tangible assets, such as Shiroi Data Center Campus construction-related, of JPY9,760 million (JPY4,893 million for 1Q-3Q21), payments for purchases of intangible assets, such as software, of JPY4,150 million (JPY3,627 million for 1Q-3Q21), and proceeds from sales of tangible assets of JPY1,216 million (JPY1,776 million for 1Q-3Q21).
Net cash used in financing activities for 1Q-3Q22 was JPY20,766 million (net cash used in financing activities of JPY22,240 million for 1Q-3Q21), mainly due to payments of other financial liabilities of JPY14,396 million (JPY14,665 million for 1Q-3Q21), which included payments under operating lease contracts such as office rent and finance lease contracts such as network equipment, repayments of long-term bank borrowings of JPY1,500 million (JPY5,170 million for 1Q-3Q21) and dividends paid of JPY4,901 million (JPY3,836 million for 1Q-3Q21).
Future Prospects including FY2022 Financial Targets
1Q-3Q22 financial results were in line with our plan with continued revenue growth. Therefore, FY2022 financial targets remain unchanged.
Presentation
Presentation materials will be posted on our web site (https://www.iij.ad.jp/en/ir/) on February 8, 2023.
http://ml.globenewswire.com/Resource/Download/9ef1ce5c-ec58-425d-ad22-37eaf296fd5a
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 First Section of the Tokyo Stock Exchange (“TSE”) in 2006 and transitioned to the Prime Market of TSE from April 2022.
For inquiries, contact:
IIJ Investor Relations Tel: +81-3-5205-6500 E-mail: ir@iij.ad.jp URL: https://www.iij.ad.jp/en/ir
Disclaimer:
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 profits, 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.
| Condensed Consolidated Statements of Financial Position (Unaudited) | ||||||
| March 31, 2022 | December 31, 2022 | |||||
| Millions of yen | Millions of yen | |||||
| Assets | ||||||
| Current assets | ||||||
| Cash and cash equivalents | 47,391 | 41,327 | ||||
| Trade receivables | 37,649 | 36,079 | ||||
| Inventories | 2,608 | 4,290 | ||||
| Prepaid expenses | 13,553 | 15,907 | ||||
| Contract assets | 1,870 | 3,318 | ||||
| Other financial assets | 1,295 | 1,926 | ||||
| Other current assets | 119 | 301 | ||||
| Total current assets | 104,485 | 103,148 | ||||
| Non-current assets | ||||||
| Tangible assets | 17,846 | 22,902 | ||||
| Right-of-use assets | 44,874 | 42,498 | ||||
| Goodwill | 9,479 | 9,790 | ||||
| Intangible assets | 16,424 | 16,200 | ||||
| Investments accounted for using equity method | 5,830 | 5,598 | ||||
| Prepaid expenses | 10,452 | 11,850 | ||||
| Contract assets | 69 | 47 | ||||
| Other investments | 17,410 | 17,689 | ||||
| Deferred tax assets | 183 | 193 | ||||
| Other financial assets | 4,245 | 4,375 | ||||
| Other non-current assets | 508 | 568 | ||||
| Total non-current assets | 127,320 | 131,710 | ||||
| Total assets | 231,805 | 234,858 | ||||
| Millions of yen | Millions of yen | |||||
| Liabilities and Equity | ||||||
| Liabilities | ||||||
| Current liabilities | ||||||
| Trade and other payables | 20,742 | 23,819 | ||||
| Borrowings | 16,370 | 16,770 | ||||
| Income taxes payable | 5,795 | 1,978 | ||||
| Contract liabilities | 9,571 | 9,758 | ||||
| Deferred income | 65 | 102 | ||||
| Other financial liabilities | 17,035 | 15,775 | ||||
| Other current liabilities | 7,199 | 5,900 | ||||
| Total current liabilities | 76,777 | 74,102 | ||||
| Non-current liabilities | ||||||
| Borrowings | 5,500 | 3,671 | ||||
| Retirement benefit liabilities | 4,395 | 4,578 | ||||
| Provisions | 786 | 789 | ||||
| Contract liabilities | 7,429 | 6,926 | ||||
| Deferred income | 340 | 297 | ||||
| Deferred tax liabilities | 641 | 515 | ||||
| Other financial liabilities | 30,146 | 29,674 | ||||
| Other non-current liabilities | 1,170 | 1,141 | ||||
| Total non-current liabilities | 50,407 | 47,591 | ||||
| Total liabilities | 127,184 | 121,693 | ||||
| Equity | ||||||
| Share capital | 25,562 | 25,562 | ||||
| Share premium | 36,518 | 36,677 | ||||
| Retained earnings | 37,024 | 44,977 | ||||
| Other components of equity | 6,275 | 6,621 | ||||
| Treasury shares | (1,851 | ) | (1,831 | ) | ||
| Total equity attributable to owners of the parent | 103,528 | 112,006 | ||||
| Non-controlling interests | 1,093 | 1,159 | ||||
| Total equity | 104,621 | 113,165 | ||||
| Total liabilities and equity | 231,805 | 234,858 | ||||
| Condensed Consolidated Statements of Profit or Loss (Unaudited) | ||||
| Nine Months Ended | Nine Months Ended | |||
| December 31, 2021 | December 31, 2022 | |||
| Millions of yen | Millions of yen | |||
| Revenues | ||||
| Network services | 95,097 | 102,744 | ||
| System integration | 68,413 | 80,477 | ||
| ATM operation business | 2,090 | 2,118 | ||
| Total revenues | 165,600 | 185,339 | ||
| Cost of sales | ||||
| Cost of network services | (68,653) | (74,627) | ||
| Cost of systems integration | (58,869) | (67,835) | ||
| Cost of ATM operation business | (1,294) | (1,221) | ||
| Total cost of sales | (128,816) | (143,683) | ||
| Gross Profit | 36,784 | 41,656 | ||
| Selling, general and administrative expenses | (20,494) | (23,064) | ||
| Other operating income | 125 | 246 | ||
| Other operating expenses | (117) | (48) | ||
| Operating Profit | 16,298 | 18,790 | ||
| Finance income | 2,756 | 802 | ||
| Finance expenses | (401) | (413) | ||
| Share of profit (loss) of investments accounted for using equity method | (1,056) | (161) | ||
| Profit (loss) before tax | 17,597 | 19,018 | ||
| Income tax expense | (5,974) | (6,049) | ||
| Profit (loss) for the period | 11,623 | 12,969 | ||
| Profit (loss) for the period attributable to: | ||||
| Owners of the parent | 11,522 | 12,854 | ||
| Non-controlling interests | 101 | 115 | ||
| Total | 11,623 | 12,969 | ||
| Earnings per share | ||||
| Basic earnings per share (yen) | 63.81 | 71.14 | ||
| Diluted earnings per share (yen) | 63.50 | 70.79 | ||
| ※IIJ conducted a stock split at a ratio of two-for-one with an effective date of October 1, 2022. | ||||
| Basic earnings per share and diluted earnings per share are calculated as if the stock split had been conducted at the beginning of the previous fiscal year. | ||||
| Condensed Consolidated Statements of Profit or Loss (Unaudited) | ||||||
| Three Months Ended | Three Months Ended | |||||
| December 31, 2021 | December 31, 2022 | |||||
| Millions of yen | Millions of yen | |||||
| Revenues | ||||||
| Network services | 31,661 | 35,038 | ||||
| System integration | 24,204 | 27,629 | ||||
| ATM operation business | 681 | 710 | ||||
| Total revenues | 56,546 | 63,377 | ||||
| Cost of sales | ||||||
| Cost of network services | (21,899 | ) | (24,825 | ) | ||
| Cost of systems integration | (20,529 | ) | (22,978 | ) | ||
| Cost of ATM operation business | (419 | ) | (409 | ) | ||
| Total cost of sales | (42,847 | ) | (48,212 | ) | ||
| Gross Profit | 13,699 | 15,165 | ||||
| Selling, general and administrative expenses | (6,704 | ) | (7,556 | ) | ||
| Other operating income | 32 | 25 | ||||
| Other operating expenses | (33 | ) | (17 | ) | ||
| Operating Profit | 6,994 | 7,617 | ||||
| Finance income | 983 | 19 | ||||
| Finance expenses | (128 | ) | (1,393 | ) | ||
| Share of profit (loss) of investments accounted for using equity method | (684 | ) | (83 | ) | ||
| Profit (loss) before tax | 7,165 | 6,160 | ||||
| Income tax expense | (2,500 | ) | (1,931 | ) | ||
| Profit (loss) for the period | 4,665 | 4,229 | ||||
| Profit (loss) for the period attributable to: | ||||||
| Owners of the parent | 4,630 | 4,215 | ||||
| Non-controlling interests | 35 | 14 | ||||
| Total | 4,665 | 4,229 | ||||
| Earnings per share | ||||||
| Basic earnings per share (yen) | 25.63 | 23.33 | ||||
| Diluted earnings per share (yen) | 25.51 | 23.21 | ||||
| ※IIJ conducted a stock split at a ratio of two-for-one with an effective date of October 1, 2022. | ||||||
| Basic earnings per share and diluted earnings per share are calculated as if the stock split had been conducted at the beginning of the previous fiscal year. | ||||||
| Condensed Consolidated Statements of Comprehensive Income (Unaudited) | ||||||
| Nine Months Ended | Nine Months Ended | |||||
| December 31, 2021 | December 31, 2022 | |||||
| Millions of yen | Millions of yen | |||||
| Profit (loss) | 11,623 | 12,969 | ||||
| Other comprehensive income, net of tax | ||||||
| Items that will not be reclassified to profit or loss | ||||||
| Net change in fair value of equity instruments designated as measured at fair value through other comprehensive income | 1,887 | (274 | ) | |||
| Total of items that will not be reclassified to profit or loss | 1,887 | (274 | ) | |||
| Items that may be reclassified to profit or loss | ||||||
| Exchange differences on translation of foreign operations | 245 | 579 | ||||
| Financial assets measured at fair value through other comprehensive income | (0 | ) | (3 | ) | ||
| Share of other comprehensive income of investments accounted for using equity method | 19 | 44 | ||||
| Total of items that may be reclassified to profit or loss | 264 | 620 | ||||
| Total other comprehensive income, net of tax | 2,151 | 346 | ||||
| Other comprehensive income | 13,774 | 13,315 | ||||
| Other comprehensive income attributable to: | ||||||
| Owners of the parent | 13,673 | 13,200 | ||||
| Non-controlling interest | 101 | 115 | ||||
| Other comprehensive income | 13,774 | 13,315 | ||||
| Condensed Consolidated Statements of Comprehensive Income (Unaudited) | ||||||
| Three Months Ended | Three Months Ended | |||||
| December 31, 2021 | December 31, 2022 | |||||
| Millions of yen | Millions of yen | |||||
| Profit (loss) | 4,665 | 4,229 | ||||
| Other comprehensive income, net of tax | ||||||
| Items that will not be reclassified to profit or loss | ||||||
| Net change in fair value of equity instruments designated as measured at fair value through other comprehensive income | (121 | ) | 437 | |||
| Total of items that will not be reclassified to profit or loss | (121 | ) | 437 | |||
| Items that may be reclassified to profit or loss | ||||||
| Exchange differences on translation of foreign operations | 227 | (433 | ) | |||
| Financial assets measured at fair value through other comprehensive income | (0 | ) | (2 | ) | ||
| Share of other comprehensive income of investments accounted for using equity method | 6 | 10 | ||||
| Total of items that may be reclassified to profit or loss | 233 | (425 | ) | |||
| Total other comprehensive income, net of tax | 112 | 12 | ||||
| Other comprehensive income | 4,777 | 4,241 | ||||
| Other comprehensive income attributable to: | ||||||
| Owners of the parent | 4,742 | 4,227 | ||||
| Non-controlling interest | 35 | 14 | ||||
| Other comprehensive income | 4,777 | 4,241 | ||||
| Condensed Consolidated Statements of Changes in Shareholders’ Equity (Unaudited) | |||||||||||||||||||||
| Nine months ended December 31, 2021 | |||||||||||||||||||||
| Owners of the parent’s shareholders’ equity | Non-controlling interests | Total equity | |||||||||||||||||||
| Share capital | Share premium | Retained earnings | Other components of equity | Treasury shares | Total | ||||||||||||||||
| Millions of yen | Millions of yen | Millions of yen | Millions of yen | Millions of yen | Millions of yen | Millions of yen | Millions of yen | ||||||||||||||
| Balance, April 1, 2021 | 25,531 | 36,389 | 25,047 | 4,865 | (1,875 | ) | 89,957 | 1,015 | 90,972 | ||||||||||||
| Comprehensive income | |||||||||||||||||||||
| Profit (loss) | - | - | 11,522 | - | - | 11,522 | 101 | 11,623 | |||||||||||||
| Other comprehensive income | - | - | - | 2,151 | - | 2,151 | - | 2,151 | |||||||||||||
| Total comprehensive income | - | - | 11,522 | 2,151 | - | 13,673 | 101 | 13,774 | |||||||||||||
| Transactions with owners | |||||||||||||||||||||
| Issuance of common stock | 31 | (31 | ) | - | - | - | 0 | - | 0 | ||||||||||||
| Disposal of treasury shares | - | 53 | - | - | 24 | 77 | - | 77 | |||||||||||||
| Dividends paid | - | - | (3,836 | ) | - | - | (3,836 | ) | (49 | ) | (3,885 | ) | |||||||||
| Stock-based compensation | - | 61 | - | - | - | 61 | - | 61 | |||||||||||||
| Other | - | (5 | ) | - | - | - | (5 | ) | (2 | ) | (7 | ) | |||||||||
| Total transactions with owners | 31 | 78 | (3,836 | ) | - | 24 | (3,703 | ) | (51 | ) | (3,754 | ) | |||||||||
| Balance, December 31, 2021 | 25,562 | 36,467 | 32,733 | 7,016 | (1,851 | ) | 99,927 | 1,065 | 100,992 | ||||||||||||
| Nine months ended December 31, 2022 | |||||||||||||||||||||
| Owners of the parent’s shareholders’ equity | Non-controlling interests | Total equity | |||||||||||||||||||
| Share capital | Share premium | Retained earnings | Other components of equity | Treasury shares | Total | ||||||||||||||||
| Millions of yen | Millions of yen | Millions of yen | Millions of yen | Millions of yen | Millions of yen | Millions of yen | Millions of yen | ||||||||||||||
| Balance, April 1, 2022 | 25,562 | 36,518 | 37,024 | 6,275 | (1,851 | ) | 103,528 | 1,093 | 104,621 | ||||||||||||
| Comprehensive income | |||||||||||||||||||||
| Profit (loss) | - | - | 12,854 | - | - | 12,854 | 115 | 12,969 | |||||||||||||
| Other comprehensive income | - | - | - | 346 | - | 346 | - | 346 | |||||||||||||
| Total comprehensive income | - | - | 12,854 | 346 | - | 13,200 | 115 | 13,315 | |||||||||||||
| Transactions with owners | |||||||||||||||||||||
| Purchase of treasury stock | - | - | - | - | 0 | 0 | - | 0 | |||||||||||||
| Disposal of treasury shares | - | 99 | - | - | 20 | 119 | - | 119 | |||||||||||||
| Dividends paid | - | - | (4,901 | ) | - | - | (4,901 | ) | (49 | ) | (4,950 | ) | |||||||||
| Stock-based compensation | - | 60 | - | - | - | 60 | - | 60 | |||||||||||||
| Total transactions with owners | - | 159 | (4,901 | ) | - | 20 | (4,722 | ) | (49 | ) | (4,771 | ) | |||||||||
| Balance, December 31, 2022 | 25,562 | 36,677 | 44,977 | 6,621 | (1,831 | ) | 112,006 | 1,159 | 113,165 | ||||||||||||
| Condensed Consolidated Statements of Cash Flows (Unaudited) | ||||||
| Nine Months Ended | Nine Months Ended | |||||
| December 31, 2021 | December 31, 2022 | |||||
| Millions of yen | Millions of yen | |||||
| Cash flows from operating activities | ||||||
| Profit (loss) before tax | 17,597 | 19,018 | ||||
| Adjustments | ||||||
| Depreciation and amortization | 21,088 | 21,254 | ||||
| Loss (gain) on sales/disposals of property and equipment | 98 | (143 | ) | |||
| Shares of loss (profit) of investments accounted for using equity method | 1,056 | 161 | ||||
| Finance income | (2,776 | ) | (802 | ) | ||
| Finance expenses | 401 | 413 | ||||
| Other | 112 | 475 | ||||
| Changes in working capital | ||||||
| Decrease (increase) in trade receivables | 4,277 | 1,784 | ||||
| Decrease (increase) in inventories | (208 | ) | (1,669 | ) | ||
| Decrease (increase) in prepaid expenses | (2,114 | ) | (3,440 | ) | ||
| Decrease (increase) in contract assets | (1,442 | ) | (1,426 | ) | ||
| Decrease (increase) in other assets | (102 | ) | (183 | ) | ||
| Decrease (increase) in other financial assets | (563 | ) | (745 | ) | ||
| Increase (decrease) in trade and other payables | (606 | ) | 3,516 | |||
| Increase (decrease) in contract liabilities | (562 | ) | (577 | ) | ||
| Increase (decrease) in deferred income | (8 | ) | (1 | ) | ||
| Increase (decrease) in other liabilities | (1,152 | ) | (1,402 | ) | ||
| Increase (decrease) in other financial liabilities | 851 | 969 | ||||
| Increase (decrease) in retirement benefit liabilities | 332 | 183 | ||||
| Subtotal | 36,279 | 37,385 | ||||
| Interest and dividends received | 170 | 201 | ||||
| Interest paid | (398 | ) | (401 | ) | ||
| Income taxes paid | (5,680 | ) | (9,871 | ) | ||
| Cash flows from operating activities | 30,370 | 27,314 | ||||
| Cash flows from investing activities | ||||||
| Purchases of tangible assets | (4,893 | ) | (9,760 | ) | ||
| Proceeds from sales of tangible assets | 1,776 | 1,216 | ||||
| Purchases of intangible assets | (3,627 | ) | (4,150 | ) | ||
| Proceeds from sales of intangible assets | 0 | - | ||||
| Purchase of a subsidiary | (2,612 | ) | - | |||
| Purchases of other investments | (574 | ) | (397 | ) | ||
| Proceeds from sales of other investments | 104 | 19 | ||||
| Payments for leasehold deposits and guarantee deposits | (91 | ) | (49 | ) | ||
| Proceeds from collection of leasehold deposits and guarantee deposits | 141 | 16 | ||||
| Payments for refundable insurance policies | (56 | ) | (56 | ) | ||
| Other | 0 | 1 | ||||
| Cash flows from investing activities | (9,832 | ) | (13,160 | ) | ||
| Cash flows from financing activities | ||||||
| Proceeds from long-term borrowings | - | 179 | ||||
| Repayment of long-term borrowings | (5,170 | ) | (1,500 | ) | ||
| Net increase (decrease) in short-term borrowings | 1,480 | (100 | ) | |||
| Payments of other financial liabilities | (14,665 | ) | (14,396 | ) | ||
| Dividends paid | (3,836 | ) | (4,901 | ) | ||
| Other | (48 | ) | (48 | ) | ||
| Cash flows from financing activities | (22,240 | ) | (20,766 | ) | ||
| Effect of exchange rate changes on cash and cash equivalents | 195 | 548 | ||||
| Net increase (decrease) in cash and cash equivalents | (1,507 | ) | (6,064 | ) | ||
| Cash and cash equivalents, beginning of the period | 42,467 | 47,391 | ||||
| Cash and cash equivalents, end of the period | 40,960 | 41,327 | ||||
Notes to Condensed Consolidated Financial Statements (Unaudited)
Going Concern Assumption
Nothing to be reported.
Material Changes in Shareholders’ Equity
Nothing to be reported.
Segment Information
IIJ and its subsidiaries (collectively “the Company”) primarily operates its network service and system integration business, which provides a comprehensive range of network solutions to meet its customers’ needs by cross-selling a variety of services, including Internet connectivity services, WAN services, outsourcing services, systems integration and sales of network-related equipment, and the ATM operation business. Therefore, the Company defined two reportable segments: “Network service and systems integration business” and “ATM operation business.”
Segment information for the Company is as follows:
| Nine months ended December 31, 2021 | |||||||||
| Reportable segments | |||||||||
| Network service and systems integration business | ATM operation business | Adjustments | Consolidated | ||||||
| Millons of yen | Millons of yen | Millons of yen | Millons of yen | ||||||
| Revenue | |||||||||
| Customers | 163,510 | 2,090 | - | 165,600 | |||||
| Intersegment transactions | 96 | - | (96 | ) | - | ||||
| Total revenue | 163,606 | 2,090 | (96 | ) | 165,600 | ||||
| Segment operating profit | 15,747 | 617 | (66 | ) | 16,298 | ||||
| Finance income | 2,756 | ||||||||
| Finance expense | (401 | ) | |||||||
| Share of profit (loss) of investments accounted for using the equity method | (1,056 | ) | |||||||
| Profit before tax | 17,597 | ||||||||
| Nine months ended December 31, 2022 | |||||||||
| Reportable segments | |||||||||
| Network service and systems integration business | ATM operation business | Adjustments | Consolidated | ||||||
| Millons of yen | Millons of yen | Millons of yen | Millons of yen | ||||||
| Revenue | |||||||||
| Customers | 183,221 | 2,118 | - | 185,339 | |||||
| Intersegment transactions | 79 | - | (79 | ) | - | ||||
| Total revenue | 183,300 | 2,118 | (79 | ) | 185,339 | ||||
| Segment operating profit | 18,117 | 693 | (20 | ) | 18,790 | ||||
| Finance income | 802 | ||||||||
| Finance expense | (413 | ) | |||||||
| Share of profit (loss) of investments accounted for using the equity method | (161 | ) | |||||||
| Profit before tax | 19,018 | ||||||||
Intersegment transactions are based on market price.
Subsequent Events
Nothing to be reported.
Note: The following information is provided to disclose Internet Initiative Japan Inc. (“IIJ”) financial results (unaudited) for the nine months ended December 31, 2022 (“1Q-3Q22”) in the form defined by the Tokyo Stock Exchange.
Consolidated Financial Results for the Nine Months ended December 31, 2022 [Under IFRS]
February 8, 2023
Company name: Internet Initiative Japan Inc.
Exchange listed: Tokyo Stock Exchange
Ticker symbol: 3774
URL: https://www.iij.ad.jp/
Representative: Eijiro Katsu, President and Representative Director
Contact: Akihisa Watai, Senior Managing Director and CFO
TEL: +81-3-5205-6500
Scheduled date for filing of quarterly report (Shihanki-houkokusho) to Japan’s regulatory organization: February 14, 2023
Scheduled date for dividend payment: -
Supplemental material on quarterly results: Yes
Presentation on quarterly results: Yes (for institutional investors and analysts)
(Amounts of less than JPY one million are rounded)
1. Consolidated Financial Results for the Nine Months ended December 31, 2022 (April 1, 2022 to December 31, 2022)
| (1) Consolidated Results of Operations | (% shown is YoY change) | ||||||||||||
| Revenues | Operating profit | Profit (loss) before tax | Profit (loss) for the period | Profit (loss) attributable to owners of the parent | Other comprehensive income | ||||||||
| JPY millions | % | JPY millions | % | JPY millions | % | JPY millions | % | JPY millions | % | JPY millions | % | ||
| Nine Months ended December 31, 2022 | 185,339 | 11.9 | 18,790 | 15.3 | 19,018 | 8.1 | 12,969 | 11.6 | 12,854 | 11.6 | 13,315 | (3.3 | ) |
| Nine Months ended December 31, 2021 | 165,600 | 6.1 | 16,298 | 60.9 | 17,597 | 90.7 | 11,623 | 95.5 | 11,522 | 96.1 | 13,774 | 81.7 | |
| Basic earnings per share | Diluted earnings per share | |
| JPY | JPY | |
| Nine Months ended December 31, 2022 | 71.14 | 70.79 |
| Nine Months ended December 31, 2021 | 63.81 | 63.50 |
(Note) IIJ conducted a stock split at a ratio of two-for-one with an effective date of October 1, 2022. Accordingly, basic earnings per share and diluted earnings per share have been calculated as if the stock split had been conducted at the beginning of the previous consolidated fiscal year.
(2) Consolidated Financial Position
| Total assets | Total equity | Total equity attributable to owners of the parent | Ratio of owners' equity to total assets | |
| JPY millions | JPY millions | JPY millions | % | |
| As of December 31, 2022 | 234,858 | 113,165 | 112,006 | 47.7 |
| As of March 31, 2022 | 231,805 | 104,621 | 103,528 | 44.7 |
2．Dividends
| Annual Dividends | |||||
| 1Q-end | 2Q-end | 3Q-end | Year-end | Total | |
| JPY | JPY | JPY | JPY | JPY | |
| Fiscal Year Ended March 31, 2022 | ― | 23.00 | ― | 25.00 | 48.00 |
| Fiscal Year Ending March 31, 2023 | ― | 29.25 | ― | ||
| Fiscal Year Ending March 31, 2023 (forecast) | 14.63 | ― | |||
(Notes)
1. Changes from the latest forecasts disclosed: None
2. IIJ conducted a stock split at a ratio of two-for-one effective as of October 1, 2022. The forecast of year-end dividend per share is the amount after the stock split. Regarding the amount on a pre-split basis, the forecast of year-end and annual dividend per share are JPY29.26 and JPY58.51, respectively.
3．Targets of Consolidated Financial Results for the Fiscal Year ending March 31, 2023
(April 1, 2022 through March 31, 2023)
| (% shown is YoY change) | |||||||||
| Revenues | Operating profit | Profit (loss) before tax | Profit (loss) for the year attributable to owners of the parent | Basic earnings per share | |||||
| JPY millions | % | JPY millions | % | JPY millions | % | JPY millions | % | JPY | |
| Fiscal Year Ending March 31, 2023 | 250,000 | 10.5 | 27,200 | 15.5 | 26,300 | 8.8 | 17,500 | 11.7 | 96.89 |
(Notes)
- Changes from the latest forecasts disclosed: None
- IIJ conducted a stock split at a ratio of two-for-one with an effective date of October 1, 2022. The target of basic earnings per share is the amount after the stock split.
- As for the details about our financial targets for the fiscal year ending March 31, 2023, please refer to “Future Prospects including FY2022 Financial Targets” which is disclosed on page 8 of this earnings release.
* Notes:
(1) Changes in significant subsidiaries: None
(2) Changes in accounting policies and estimate
- Changes in accounting policies required by IFRS: None
- Other changes in accounting policies: None
- Changes in accounting estimates: None
(3) Number of shares issued (common stock)
- Number of shares issued (inclusive of treasury stock):
As of December 31, 2022: 187,069,600 shares
As of March 31, 2022: 187,069,600 shares - Number of treasury stock:
As of December 31, 2022: 6,371,696 shares
As of March 31, 2022: 6,443,334 shares - Number of weighted average common shares outstanding:
For the nine months ended December 31, 2022: 180,678,380 shares
For the nine months ended December 31, 2021: 180,581,022 shares
* IIJ conducted a stock split at a ratio of two-for-one with an effective date of October 1, 2022. Accordingly, number of shares issued, number of treasury stock and number of weighted average common shares outstanding above have been calculated as if the stock split had been conducted at the beginning of the previous consolidated fiscal year, respectively.
* Status of Audit Procedures
This document is not subject to the audit procedures by certified public accountant or independent auditor.
* Explanation on the Appropriate Use of Future Outlook and other special instructions
i) Forward-looking statements
Forward-looking statements disclosed in this document are based on IIJ Group’s expectation, estimates, and projections based on information available to IIJ Group as of February 8, 2023. As these forward-looking statements are subject to known and unknown risks and uncertainties, actual results may differ from those disclosed due, for example, to but not limited to changes in business climate and/or market trends. As for our latest forecast of our financial targets, please refer to “Future Prospects including FY2022 Financial Targets” written on page 8 of this document.
ii) Change in the unit of presentation for monetary amounts
Amounts of accounts and other items presented in our condensed quarterly consolidated financial statements were previously stated in thousands of yen, but effective from the first quarter ended June 30, 2022, IIJ has changed to present such amounts in millions of yen. In order to facilitate comparison, the amounts for the previous consolidated fiscal year are also presented in millions of yen.
iii) Others
Presentation material will be disclosed on TDnet as well as posted on our website on February 8, 2023.
