IIJ Announces its First Three Months Results for the Fiscal Year Ending March 31, 2022

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TOKYO, Aug. 10, 2021 (GLOBE NEWSWIRE) — Internet Initiative Japan Inc. (“IIJ”, TSE1: 3774) today announced its consolidated financial results for the first three months for the fiscal year ending March 31, 2022 (“1Q21”, from April 1, 2021 to June 30, 2021) under International Financial Reporting Standards (IFRS)1

 
Highlights of Financial Results for 1Q21
Total revenues JPY53.0 billion up 5.2 % YoY2
Gross profit JPY11.4 billion up 40.8 % YoY
Operating profit JPY4.4 billion up 113.0 % YoY
Profit before tax JPY5.4 billion up 215.8 % YoY
Net profit3 JPY3.5 billion up 214.1 % YoY
 

Overview of 1Q21 Financial Results and Business Outlook
“Under the increasing IT utilization by Japanese enterprises, we significantly expanded profit in the last fiscal year. This was realized by our continuous business investment on a long-term basis, including expansion and operation of reliable network infrastructure, development of various service line-ups and business, and enhancement of customer relations. Digital transformation (DX), accelerated by the COVID-19 pandemic, would not be a temporary phenomenon but a long lasting trend which should continue to grow. By leveraging such tailwind circumstance with our competitive advantages, we would like to largely expand our business scale in the middle-to-long term,” said Koichi Suzuki, Founder and Chairman of IIJ.

“As the first fiscal year of our new Mid-term Plan, we are pleased to announce that we had a strong start. In 1Q21, we saw strong demands from Japanese enterprises in various industries for both network services and systems integration. Driven by the continuous demands for network services, such as IP services4, outsourcing services, which includes security services, and WAN services, we continuously accumulated recurring revenues5, 85.8% of 1Q21 total revenues. With regard to systems integration, we strongly accumulated order received for systems construction which increased by 30.5% YoY, as well as expanded 1Q21 system integration revenue and gross profit, which included our new consolidated subsidiary PTC6 in Singapore,” said Eijiro Katsu, President of IIJ.

“By realizing our ongoing strategy, we would be able to continuously achieve profit growth as well, which should be reflected in our shareholder return. Accordingly, we expect our market value to increase by which we believe it gives us more flexibility to our strategies including pursuit of M&A opportunities more than ever. Advancement of Internet-related technology and spread of DX would further improve the efficiency of social behavior, and reduce total energy consumption in the long-term. As a leading comprehensive network solution provider in Japan, we would like to contribute to realizing sustainable society through our business activities,” concluded Katsu.

____________________________

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 IP services are IIJ’s dedicated-type Internet connectivity services, mainly used by corporate users.
5 Recurring revenues is revenues that users can count on receiving every single month through continuous provision of services.
6 For details, please refer to our press release titled “Notice Regarding Acquisition of Shares in PTC SYSTEM (S) PTE LTD (as a New Subsidiary)” https://www.iij.ad.jp/en/news/pressrelease/2021/pdf/PTC%20SYSTEM_E.pdf

1Q21 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
  1Q20   1Q21 YoY Change
  JPY millions   JPY millions
 Total revenues 50,379   52,975   5.2  
Network services 30,934   31,475   1.7  
Systems integration (SI) 18,875   20,807   10.2  
ATM operation business 570   693   21.7  
 Total costs (42,266 ) (41,548 ) (1.7 )
Network services (24,944 ) (23,145 ) (7.2 )
Systems integration (SI) (16,884 ) (17,959 ) 6.4  
ATM operation business (438 ) (444 ) 1.2  
 Total gross profit 8,113   11,427   40.8  
Network services 5,990   8,330   39.1  
Systems integration (SI) 1,991   2,848   43.0  
ATM operation business 132   249   90.2  
 SG&A, R&D, and other operating income (expenses) (6,066 ) (7,067 ) 16.5  
 Operating profit 2,047   4,360   113.0  
 Profit before tax 1,694   5,350   215.8  
 Profit for the period attributable to owners of the parent 1,116   3,507   214.1  
(Note) Systems integration includes equipment sales.  
       
       
Segment Results Summary
    1Q20 1Q21
    JPY millions JPY millions
 Total revenues   50,379   52,975  
 Network services and SI business   49,858   52,316  
 ATM operation business   570   693  
 Elimination   (49 ) (34 )
 Operating profit   2,047   4,360  
 Network services and SI business   1,991   4,189  
 ATM operation business   89   195  
 Elimination   (33 ) (24 )
       

1Q21 Revenues and Profit
Revenues
Total revenues were JPY52,975 million, up 5.2% YoY (JPY50,379 million for 1Q20).

Network services revenue was JPY31,475 million, up 1.7% YoY (JPY30,934 million for 1Q20).

Revenues for Internet connectivity services for enterprises were JPY9,410 million, down 4.1% YoY from JPY9,809 million for 1Q20, mainly due to decrease in IIJ Mobile MVNO Platform service, while revenues of IP services and Enterprise mobile services increased.

Revenues for Internet connectivity services for consumers were JPY6,108 million, down 5.4% YoY from JPY6,454 million for 1Q20, mainly due to reduction in unit price of our consumer mobile services.

Revenues for WAN services were JPY6,447 million, up 4.4% YoY from JPY6,175 million for 1Q20.

Revenues for Outsourcing services were JPY9,510 million, up 11.9% YoY from JPY8,496 million for 1Q20, mainly due to an increase in security-related services revenues.

         
Network Services Revenues Breakdown
  1Q20 1Q21 YoY Change
  JPY millions JPY millions
 Total network services 30,934 31,475 1.7  
   Internet connectivity services (enterprise) 9,809 9,410 (4.1 )
    IP services (including data center connectivity services) 2,881 3,275 13.7  
    IIJ Mobile Services  6,047 5,189 (14.2 )
      Enterprise mobile service (IoT usages etc.)  1,673 2,344 40.1  
      IIJ Mobile MVNO Platform service (MVNE) 4,374 2,845 (35.0 )
    Others  881 946 7.4  
   Internet connectivity services (consumer) 6,454 6,108 (5.4 )
    IIJmio Mobile Services  5,796 5,392 (7.0 )
    Others  658 716 8.7  
   WAN services 6,175 6,447 4.4  
   Outsourcing services 8,496 9,510 11.9  
       
Number of Contracts and Subscription for Connectivity Services
  As of June 30, 2020 As of June 30, 2021 YoY Change
  Internet connectivity services (enterprise) 2,135,482 2,299,032 163,550  
    IP service (greater than or equal to 1Gbps)  778 764 (14 )
    IP service (less than 1Gbps)  1,246 1,202 (44 )
    IIJ Mobile Services  2,046,836 2,205,759 158,923  
      Enterprise mobile service (IoT usages etc.) 922,819 1,163,312 240,493  
     IIJ Mobile MVNO Platform service (MVNE) 1,124,017 1,042,447 (81,570 )
    Others  86,622 91,307 4,685  
  Internet connectivity services (consumer) 1,402,062 1,396,386 (5,676 )
    IIJmio Mobile Services  1,063,165 1,053,173 (9,992 )
    Others  338,897 343,213 4,316  
  Total contracted bandwidth (Gbps) 5,288.7 7,108.2 1,819.5  
(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.
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.

SI revenues, including equipment sales, were JPY20,807 million, up 10.2% YoY (JPY18,875 million for 1Q20).
Systems construction and equipment sales, a one-time revenue, was JPY6,832 million, up 4.3% YoY (JPY6,550 million for 1Q20). Of this amount, revenue of PTC was JPY840 million.
Systems operation and maintenance revenue, a recurring revenue, was JPY13,974 million, up 13.4% YoY (JPY12,325 million for 1Q20), mainly due to continued accumulation of systems operation orders as well as an increase in private cloud services’ revenues. Of this amount, revenue of PTC was JPY473 million.

Orders received for SI, including equipment sales, totaled JPY21,649 million, up 4.9% YoY (JPY20,643 million for 1Q20); orders received for systems construction and equipment sales were JPY8,737 million, up 30.5% YoY (JPY6,693 million for 1Q20), and orders received for systems operation and maintenance were JPY12,911 million, down 7.4% YoY (JPY13,949 million for 1Q20).

Order backlog for SI, including equipment sales, as of June 30, 2021 amounted to JPY67,496 million, up 17.1% YoY (JPY57,631 million as of June 30, 2020); order backlog for systems construction and equipment sales was JPY11,073 million, up 44.7% YoY (JPY7,650 million as of June 30, 2020) and order backlog for systems operation and maintenance was JPY56,424 million, up 12.9% YoY (JPY49,981 million as of June 30, 2020).

ATM operation business revenues were JPY693 million, up 21.7% YoY (JPY570 million for 1Q20).

Cost of sales
Total cost of sales was JPY41,548 million, down 1.7% YoY (JPY42,266 million for 1Q20).

Cost of network services revenue was JPY23,145 million, down 7.2% YoY (JPY24,944 million for 1Q20), mainly due to a decrease in outsourcing costs. Gross profit was JPY8,330 million, up 39.1% YoY (JPY5,990 million for 1Q20), and gross profit ratio was 26.5% (19.4% for 1Q20).

Cost of SI revenues, including equipment sales was JPY17,959 million, up 6.4% YoY (JPY16,884 million for 1Q20), mainly due to increases in outsourcing and personnel costs. The amount included PTC’s cost of JPY1,164 million. Gross profit was JPY2,848 million, up 43.0% YoY (JPY1,991 million for 1Q20) and gross profit ratio was 13.7% (10.5% for 1Q20).

Cost of ATM operation business revenues was JPY444 million, up 1.2% YoY (JPY438 million for 1Q20). Gross profit was JPY249 million (JPY132 million for 1Q20) and gross profit ratio was 36.0% (23.1% for 1Q20).

Selling, general and administrative expenses and other operating income and expenses
Selling, general and administrative expenses, including research and development expenses, totaled JPY7,083 million, up 17.1% YoY (JPY6,049 million for 1Q20), mainly due to increases in personnel-related expenses and advertising expenses. Of this amount, PTC’s expenses was JPY96 million.
Other operating income was JPY52 million (JPY48 million for 1Q20).
Other operating expenses was JPY36 million (JPY65 million for 1Q20), mainly due to disposal loss on fixed assets.

Operating profit
Operating profit was JPY4,360 million (JPY2,047 million for 1Q20), up 113.0% YoY.

Finance income and expenses, and share of profit (loss) of investments accounted for using equity method
Finance income was JPY1,361 million, compared to JPY80 million for 1Q20. It included gains on financial instruments, mainly related to funds, of JPY1,296 million (loss of JPY3 million for 1Q20).

Finance expense was JPY154 million, compared to JPY154 million for 1Q20. It included interest expenses of JPY137 million (JPY151 million for 1Q20).

Share of loss of investments accounted for using equity method was JPY217 million (compared to loss of JPY279 million for 1Q20), mainly due to loss of DeCurret Inc. of JPY296 million.

Profit before tax
Profit before tax was JPY5,350 million (JPY1,694 million for 1Q20), up 215.8% YoY.

Profit for the period
Income tax expense was JPY1,807 million (JPY572 million for 1Q20). As a result, profit for the period was JPY3,543 million (JPY1,122 million for 1Q20), up 215.8% YoY.

Profit for the period attributable to non-controlling interests was JPY36 million (JPY6 million for 1Q20), mainly related to net income of Trust Networks Inc.

Profit for the period attributable to owners of parent was JPY3,507 million (JPY1,116 million for 1Q20), up 214.1% YoY.

Financial Position as of June 30, 2021
As of June 30, 2021, the balance of total assets was JPY217,263 million, decreased by JPY3,515 million from the balance as of March 31, 2021 of JPY220,777 million.

As of June 30, 2021, the balance of current assets was JPY84,717 million, decreased by JPY8,688 million from the balance as of March 31, 2021 of JPY93,405 million. The major breakdown of balance and fluctuation of current assets was: a decrease in cash and cash equivalents by JPY7,636 million, mainly due to the acquisition of PTC, to JPY34,831 million, a decrease in trade receivables by JPY6,879 million to JPY27,920 million and an increase in prepaid expenses by JPY4,486 million, of which JPY1,162 million is related to the acquisition of PTC, to JPY15,084 million.

As of June 30, 2021, the balance of non-current assets was JPY132,546 million, increased by JPY5,173 million from the balance as of March 31, 2021 of JPY127,373 million. As for the major breakdown of balance and fluctuation of non-current assets, tangible assets increased by JPY696 million to JPY17,780 million, mainly due to an expansion of Shiroi Data Center Campus. 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 JPY1,992 million to JPY48,715 million, mainly due to depreciation. Goodwill increased by JPY3,181 million to JPY9,264 million, due to the acquisition of PTC. Prepaid expenses increased by JPY1,131 million to JPY10,668 million, including an increase of JPY951 million related to the acquisition of PTC. The amount of other investments was JPY15,702 million, increased by JPY2,789 million mainly due to fluctuation of fair value of our holding marketable equity securities and funds.

As of June 30, 2021, the balance of current liabilities was JPY68,535 million, decreased by JPY4,724 million from the balance as of March 31, 2021 of JPY73,259 million. As for the major breakdown of balance and fluctuation of current liabilities, trade and other payables decreased by JPY3,760 million to JPY15,484 million. Borrowings decreased by JPY1,855 million to JPY16,705 million, due to an increase of JPY1,480 million in short-term borrowings, an increase of JPY750 million due to a transfer from non-current liabilities and a decrease by JPY4,085 million from repayment of long-term borrowings. Income taxes payable decreased by JPY1,441 million to JPY1,571 million. Contract liabilities increased by JPY2,483 million to JPY9,585 million, including an increase of JPY1,336 million related to the acquisition of PTC. Other financial liabilities increased by JPY732 million to JPY18,611 million. Other current liabilities decreased by JPY873 million to JPY6,509 million.

As of June 30, 2021, the balance of non-current liabilities was JPY55,144 million, decreased by JPY1,402 million from the balance as of March 31, 2021 of JPY56,547 million. As for the major breakdown of balance and fluctuation of non-current liabilities, long-term borrowings decreased by JPY750 million to JPY6,250 million due to a transfer to current portion. Contract liabilities increased by JPY706 million to JPY7,951 million, of which JPY1,086 million was an increase related to the acquisition of PTC. Other financial liabilities decreased by JPY1,800 million to JPY33,848 million, mainly due to a transfer to current portion.

As of June 30, 2021, the balance of total equity attributable to owners of the parent was JPY92,580 million, increased by JPY2,624 million from the balance as of March 31, 2021 of JPY89,956 million. Ratio of owners’ equity to total assets was 42.6% as of June 30, 2021.

1Q21 Cash Flows
Cash and cash equivalents as of June 30, 2021 were JPY34,831 million (JPY38,893 million as of June 30, 2020).

Net cash provided by operating activities for 1Q21 was JPY7,654 million (net cash provided by operating activities of JPY11,635 million for 1Q20). There was profit before tax of JPY5,350 million, depreciation and amortization of JPY6,606 million, including JPY2,500 million of depreciation of right-of-use operating lease assets under IFRS 16, and income taxes paid of JPY3,334 million, compared to JPY2,177 million for 1Q20. Regarding changes in working capital, there was net cash out of JPY70 million compared to net cash in of JPY4,576 million for 1Q20. As for the major factors in comparison with 1Q20, there were increases in payment of current liabilities, such as trade payable and other liabilities. The increase in net cash-outflow related to these factors exceeded the increase in cash-inflow due to a decrease in trade and other receivable and an increase in contract liabilities.

Net cash used in investing activities for 1Q21 was JPY6,414 million (net cash used in investing activities of JPY4,592 million for 1Q20), mainly due to payments for purchases of tangible assets of JPY2,839 million (JPY1,407 million for 1Q20), payments for purchases of intangible assets, such as software, of JPY1,325 million (JPY1,805 million for 1Q20), payments for the acquisition of PTC (net of its cash) of JPY2,612 million and proceeds from sales of tangible assets, which include sale and leaseback, of JPY584 million (JPY1,017 million for 1Q20).

Net cash used in financing activities for 1Q21 was JPY8,875 million (net cash used in financing activities of JPY6,802 million for 1Q20), mainly due to payments of other financial liabilities of JPY4,463 million (JPY5,223 million for 1Q20), 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 JPY4,085 million (JPY915million for 1Q20), dividends paid of JPY1,759 million (JPY609 million for 1Q20) and net increase in short-term borrowings of JPY1,480 million.

Future Prospects including FY2021 Financial Targets
While 1Q21 financial results, profit in particular, exceeded our plan, as of today, our financial targets for the fiscal year ending March 31, 2022 (FY2021) announced on May 12, 2021 remain unchanged.

Presentation
Presentation materials will be posted on our web site (https://www.iij.ad.jp/en/ir/) on August 10, 2021.
Presentation material can be found in the following file archive: http://ml.globenewswire.com/Resource/Download/74825c07-9812-470d-96a2-d9360e9780c4 

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 in 2006.

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, 2021   June 30, 2021
    Thousands of yen   Thousands of yen
Assets        
Current Assets        
Cash and cash equivalents   42,466,933     34,831,385  
Trade receivables   34,799,075     27,919,905  
Inventories   2,171,046     2,357,113  
Prepaid expenses   10,598,441     15,084,098  
Contract assets   1,281,918     1,780,186  
Other financial assets   1,975,910     2,503,951  
Other current assets   111,334     240,343  
Total Current Assets   93,404,657     84,716,981  
Non-current Assets        
Tangible assets   17,084,401     17,780,389  
Right-of-use Assets   50,707,726     48,715,478  
Goodwill   6,082,472     9,263,655  
Intangible assets   16,954,274     16,767,426  
Investments accounted for using the equity method   9,026,980     8,733,682  
Prepaid expenses   9,537,160     10,668,161  
Contract assets   46,638     75,171  
Other investments   12,912,483     15,701,659  
Deferred tax assets   143,337     202,258  
Other financial assets   4,442,704     4,184,997  
Other non-current assets   434,437     452,794  
Total non-current assets   127,372,612     132,545,670  
Total assets   220,777,269     217,262,651  
         
    March 31, 2021   June 30, 2021
    Thousands of yen   Thousands of yen
Liabilities and Equity        
Liabilities        
Current liabilities        
Trade and other payables   19,243,800     15,483,814  
Borrowings   18,560,000     16,705,000  
Income taxes payable   3,012,415     1,570,924  
Contract liabilities   7,101,821     9,584,999  
Deferred income   79,914     70,577  
Other financial liabilities   17,879,331     18,611,045  
Other current liabilities   7,381,746     6,508,589  
Total current liabilities   73,259,027     68,534,948  
Non-current liabilities        
Borrowings   7,000,000     6,250,000  
Retirement benefit liabilities   4,168,575     4,267,159  
Provisions   756,405     757,130  
Contract liabilities   7,244,411     7,950,543  
Deferred income   405,579     388,895  
Deferred tax liabilities   225,469     605,854  
Other financial liabilities   35,647,899     33,847,982  
Other non-current liabilities   1,098,253     1,076,761  
Total non-current liabilities   56,546,591     55,144,324  
Total liabilities   129,805,618     123,679,272  
Equity        
Share capital   25,530,621     25,546,483  
Share premium   36,388,811     36,383,275  
Retained earnings   25,046,813     26,794,675  
Other components of equity   4,865,110     5,706,876  
Treasury shares   (1,874,976 )   (1,850,924 )
Total equity attributable to owners of the parent   89,956,379     92,580,385  
Non-controlling interests   1,015,272     1,002,994  
Total equity   90,971,651     93,583,379  
Total liabilities and equity   220,777,269     217,262,651  
         
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Condensed Consolidated Statements of Profit or Loss (Unaudited)    
         
    Three Months Ended   Three Months Ended
    June 30, 2020   June 30, 2021
    Thousands of yen   Thousands of yen
Revenues        
Network services   30,933,934     31,474,981  
System integration   18,874,960     20,806,636  
ATM operation business   569,611     693,332  
Total revenues   50,378,505     52,974,949  
         
Cost of sales        
Cost of network services   (24,943,344 )   (23,144,645 )
Cost of systems integration   (16,883,807 )   (17,959,887 )
Cost of ATM operation business   (438,297 )   (443,541 )
Total cost of sales   (42,265,448 )   (41,548,073 )
Gross Profit   8,113,057     11,426,876  
             
Selling, general and administrative expense   (6,048,848 )   (7,082,989 )
Other operating income   48,167     52,114  
Other operating expenses   (65,147 )   (36,190 )
Operating Profit   2,047,229     4,359,811  
             
Finance income   79,776     1,361,809  
Finance expenses   (153,867 )   (154,108 )
Share of profit (loss) of investments accounted for
     using equity method
  (278,907 )   (217,110 )
Profit (loss) before tax   1,694,231     5,350,402  
Income tax expense   (572,192 )   (1,807,257 )
Profit (loss) for the period   1,122,039     3,543,145  
         
Profit (loss) for the period attributable to:        
Owners of the parent   1,116,313     3,506,873  
Non-controlling interests   5,726     36,272  
Total   1,122,039     3,543,145  
         
Earnings per share        
Basic earnings per share (yen)   12.38     38.86  
Diluted earnings per share (yen)   12.32     38.67  
         
※IIJ conducted stock a split at a ratio of two-for-one with an effective date of January 1, 2021.
Basic earnings per share and diluted earnings per share have been calculated as if the stock split was conducted at the beginning of the previous fiscal year.
         
         
Condensed Consolidated Statements of Comprehensive Income (Unaudited)    
         
    Three Months Ended   Three Months Ended
    June 30, 2020   June 30, 2021
    Thousands of yen   Thousands of yen
Profit (loss)   1,122,039     3,543,145  
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
  1,195,836     834,198  
Total items that will not be reclassified to profit or loss   1,195,836     834,198  
Items that may be reclassified to profit or loss        
Exchange differences on translation of foreign operations   (25,465 )   (5,950 )
Financial assets measured at fair value through
               other comprehensive income
  137     281  
Share of other comprehensive income of investments
               accounted for using equity method
  (31,394 )   13,237  
Total of items that may be reclassified to profit or loss   (56,722 )   7,568  
Total other comprehensive income, net of tax   1,139,114     841,766  
Other comprehensive income   2,261,153     4,384,911  
Other comprehensive income attributable to:        
Owners of the parent   2,255,427     4,348,639  
Non-controlling interest   5,726     36,272  
Other comprehensive income   2,261,153     4,384,911  
             
                               
Condensed Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)                
Three months ended June 30, 2020                    
                               
  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    
  Thousands of
yen
  Thousands of
yen
  Thousands of
yen
  Thousands of
yen
  Thousands of
yen
  Thousands of
yen
  Thousands of
yen
  Thousands of
yen
Balance, April 1, 2020 25,530,621   36,271,395     16,500,993     2,669,501     (1,896,921 )   79,075,589     981,528     80,057,117  
Comprehensive income                              
Profit (loss)       1,116,313             1,116,313     5,726     1,122,039  
Other comprehensive income           1,139,114         1,139,114         1,139,114  
Total comprehensive income       1,116,313     1,139,114         2,255,427     5,726     2,261,153  
Transactions with owners                              
Dividends paid       (608,629 )           (608,629 )   (55,832 )   (664,461 )
Stock-based compensation   14,450                 14,450         14,450  
Transfer from other components of equity to retained earnings       251,849     (251,849 )                
Total transactions with owners   14,450     (356,780 )   (251,849 )       (594,179 )   (55,832 )   (650,011 )
Balance, June 30, 2020 25,530,621   36,285,845     17,260,526     3,556,766     (1,896,921 )   80,736,837     931,422     81,668,259  
                               
                               
Three months ended June 30, 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    
  Thousands of
yen
  Thousands of
yen
  Thousands of
yen
  Thousands of
yen
  Thousands of
yen
  Thousands of
yen
  Thousands of
yen
  Thousands of
yen
Balance, April 1, 2021 25,530,621   36,388,811     25,046,813     4,865,110     (1,874,976 )   89,956,379     1,015,272     90,971,651  
Comprehensive income                              
Profit (loss)       3,506,873             3,506,873     36,272     3,543,145  
Other comprehensive income           841,766         841,766         841,766  
Total comprehensive income       3,506,873     841,766         4,348,639     36,272     4,384,911  
Transactions with owners                              
Issuance of common stock 15,862   (15,829 )               33         33  
Disposal of treasury shares   (6,436 )           24,052     17,616         17,616  
Dividends paid       (1,759,011 )           (1,759,011 )   (48,550 )   (1,807,561 )
Stock-based compensation   16,729                 16,729         16,729  
Total transactions with owners 15,862   (5,536 )   (1,759,011 )       24,052     (1,724,633 )   (48,550 )   (1,773,183 )
Balance, June 30, 2021 25,546,483   36,383,275     26,794,675     5,706,876     (1,850,924 )   92,580,385     1,002,994     93,583,379  
                               
         
Condensed Consolidated Statements of Cash Flows (Unaudited)    
         
    Three Months Ended   Three Months Ended
    June 30, 2020   June 30, 2021
    Thousands of yen   Thousands of yen
Cash flows from operating activities:        
Profit (loss) before tax   1,694,231     5,350,402  
Adjustments        
Depreciation and amortization   7,095,188     6,605,997  
Loss (gain) on sales/disposals of property and equipment   48,047     29,912  
Shares of loss (profit) of investments
          accounted for using the equity method
  278,907     217,110  
Finance income   (69,788 )   (1,326,192 )
Finance expenses   162,138     142,278  
Other   19,621     25,411  
Changes in working capital        
Decrease (increase) in trade receivables   4,090,221     8,034,205  
Decrease (increase) in inventories   345,075     (186,786 )
Decrease (increase) in prepaid expenses   (3,124,377 )   (3,364,746 )
Decrease (increase) in contract assets   (305,046 )   (526,801 )
Decrease (increase) in other assets   (132,247 )   (29,964 )
Decrease (increase) in other financial assets   880,031     (351,983 )
Increase (decrease) in trade and other payables   (1,288,730 )   (3,774,483 )
Increase (decrease) in contract liabilities   3,646,014     578,433  
Increase (decrease) in deferred income   (20,751 )   (2,764 )
Increase (decrease) in other liabilities   (455,904 )   (1,646,725 )
Increase (decrease) in other financial liabilities   867,424     1,103,038  
Increase (decrease) in retirement benefit liabilities   74,088     98,584  
Subtotal   13,804,142     10,974,926  
Interest and dividends received   153,699     150,016  
Interest paid   (145,288 )   (136,847 )
Income taxes paid   (2,177,486 )   (3,334,453 )
Cash flows from operating activities   11,635,067     7,653,642  
Cash flows from investing activities        
Purchases of tangible assets   (1,407,413 )   (2,838,570 )
Proceeds from sales of tangible assets   1,016,997     584,142  
Purchases of intangible assets   (1,804,916 )   (1,325,053 )
Purchase of a subsidiary       (2,612,008 )
Purchase of investments accounted for using equity method   (2,754,000 )    
Purchases of other investments   (22,500 )   (345,680 )
Proceeds from sales of other investments   392,353     35,371  
Payments for leasehold deposits and guarantee deposits   (2,410 )   (11,260 )
Proceeds from collection of leasehold deposits
          and guarantee deposits
  3,492     117,674  
Payments for refundable insurance policies   (14,085 )   (18,724 )
Other       43  
Cash flows from investing activities   (4,592,482 )   (6,414,065 )
Cash flows from financing activities        
Repayment of long-term borrowings   (915,000 )   (4,085,000 )
Net increase (decrease) in short-term borrowings       1,480,000  
Payments of other financial liabilities   (5,222,579 )   (4,462,858 )
Dividends paid   (608,629 )   (1,759,011 )
Other   (55,832 )   (48,516 )
Cash flows from financing activities   (6,802,040 )   (8,875,385 )
Effect of exchange rate changes on cash and cash equivalents   (19,706 )   260  
Net increase (decrease) in cash and cash equivalents   220,839     (7,635,548 )
Cash and cash equivalents, beginning of the period   38,671,734     42,466,933  
Cash and cash equivalents, end of the period   38,892,573     34,831,385  
         

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 operate their network service and system integration business, which provides a comprehensive range of network solutions to meet their 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:

Three months ended June 30, 2020

  Reportable segments        
Network service and
systems integration
business
  ATM operation
business
  Adjustments   Consolidated
Thousands of yen   Thousands of yen   Thousands of yen   Thousands of yen
Revenue              
Customers 49,808,894   569,611       50,378,505  
Intersegment transactions 48,949     (48,949 )    
Total revenue 49,857,843   569,611   (48,949 )   50,378,505  
Segment operating profit 1,990,537   88,603   (31,911 )   2,047,229  
Finance income             79,776  
Finance expense             (153,867 )
Share of profit (loss) of investments accounted for using the equity method             (278,907 )
Profit before tax             1,694,231  

Three months ended June 30, 2021

  Reportable segments        
Network service and
systems integration
business
  ATM operation
business
  Adjustments   Consolidated
Thousands of yen   Thousands of yen   Thousands of yen   Thousands of yen
Revenue              
Customers 52,281,617   693,332       52,974,949  
Intersegment transactions 34,186     (34,186 )    
Total revenue 52,315,803   693,332   (34,186 )   52,974,949  
Segment operating profit 4,189,092   194,664   (23,945 )   4,359,811  
Finance income             1,361,809  
Finance expense             (154,108 )
Share of profit (loss) of investments accounted for using the equity method             (217,110 )
Profit before tax             5,350,402  

Intersegment transactions are based on market price.

Subsequent Events
Nothing to be reported.

Changes in Accounting Policies
Nothing to be reported.

Note: The following information is provided to disclose Internet Initiative Japan Inc. (“IIJ”) financial results (unaudited) for the first three months ended June 30, 2021 (“1Q21”) in the form defined by the Tokyo Stock Exchange.

Consolidated Financial Results for the Three Months ended June 30, 2021 [Under IFRS]

August 10, 2021

Company name: Internet Initiative Japan Inc.
Exchange listed: Tokyo Stock Exchange First Section
Stock code number: 3774
URL: https://www.iij.ad.jp/en
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: August 16, 2021
Scheduled date for dividend payment: –
Supplemental material on financial results: Yes
Presentation on quarterly report: Yes (for institutional investors and analysts)

(Amounts of less than JPY one million are rounded)

1. Consolidated Financial Results for the Three Months ended June 30, 2021 (April 1, 2021 to June 30, 2021)

(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 %
Three Months ended June 30, 2021 52,975 5.2 4,360 113.0 5,350 215.8 3,543 215.8 3,507 214.1 4,385 93.9
Three Months ended June 30, 2020 50,379 1.1 2,047 48.2 1,694 23.8 1,122 35.9 1,116 43.8 2,261 63.3
  Basic earnings per share Diluted earnings per share
  JPY JPY
Three Months ended June 30, 2021 38.86 38.67
Three Months ended June 30, 2020 12.38 12.32

(Note) IIJ conducted a stock split at a ratio of two-for-one with an effective date of January 1, 2021. Accordingly, basic earnings per share and diluted earnings per share have been calculated as if the stock split was 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 June 30, 2021 217,263 93,583 92,580 42.6
As of March 31, 2021 220,777 90,972 89,956 40.7

2Dividends

  Dividend per Shares
1Q-end 2Q-end 3Q-end Year-end Total
  JPY JPY JPY JPY JPY
Fiscal Year Ended
March 31, 2021
20.50 19.50
Fiscal Year Ending
March 31, 2022
       
Fiscal Year Ending
March 31, 2022
 (forecast)
  19.50 19.50 39.00

(Notes)

  1. Changes from the latest forecasts disclosed: No
  2. IIJ conducted a stock split at a ratio of two-for-one with an effective date of January 1, 2021. The 2Q-end dividend per share for the fiscal year ended March 31, 2021 is the amount before the stock split. Regarding the post-split basis amount for the fiscal year ended March 31, 2021, 2Q-end and annual dividend per share are JPY10. 25 and JPY29.75, respectively.

3Targets of Consolidated Financial Results for the Fiscal Year Ending March 31, 2022

(% 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
Interim Period Ending September 30, 2021 108,000 6.2 6,500 24.1 6,300 41.1 4,200 51.6 46.56
Fiscal Year Ending March 31, 2022 226,000 6.1 17,500 22.8 17,300 23.3 11,700 20.5 129.70

(Notes)
1. Changes from the latest forecasts disclosed: No
2. As for the details about our financial targets for the fiscal year ending March 31, 2022, please refer to “Future Prospects including FY2021 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

  1. Changes in accounting policies required by IFRS: None
  2. Other changes in accounting policies: None
  3. Changes in accounting estimates: None

(3) Number of shares issued (common stock)

  1. Number of shares issued (inclusive of treasury stock):
    As of June 30, 2021: 93,502,400 shares
    As of March 31, 2021: 93,469,200 shares
  2. Number of treasury stock:
    As of June 30, 2021: 3,221,667 shares
    As of March 31, 2021: 3,263,532 shares
  3. Number of weighted average common shares outstanding:
    For the three months ended June 30, 2021: 90,244,770 shares
    For the three months ended June 30, 2020: 90,167,300 shares

    * IIJ conducted a stock split at a ratio of two-for-one with an effective date of January 1, 2021. 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 was conducted at the beginning of the previous consolidated fiscal year, respectively.

* Status of Audit Procedures
This document is not subject to the quarterly review 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 August 10, 2021. 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 for the fiscal year ending March 31, 2022, please refer to the page 8 of this document.

ii) Others
Presentation material will be disclosed on TDnet as well as posted on our website on August 10, 2021.

IIJ Announces its First Three Months Results for the Fiscal Year Ending March 31, 2022

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